USDCAD Falls As the Canadian Dollar Rallies Against the US Dollar

The USDCAD currency pair was trading down over 28 pips as the US dollar fell against the Canadian dollar following the release of the US nonfarm payrolls. The US nonfarm payrolls came in at 336,000 new jobs compared to analysts' consensus estimates of 171,000 jobs and the previous figure of 227,000 jobs.

The upbeat nonfarm payrolls initially overshadowed the positive Canadian labour market data released by Statistics Canada, which saw the country add 63,800 jobs compared to the expected 22,100 jobs and the previous figure of 39,900 new jobs. 

The upbeat US and Canadian jobs data have fueled renewed investor expectations of another rate hike from the US Federal Reserve and the Bank of Canada before the year ends. Due to the upbeat jobs data from both countries, another rate hike now seems likely from the two central banks. 

Today’s nonfarm payrolls were the most substantial job market gains in eight months for the US and were way above the 70,000-100,000 new jobs needed to keep up with the growth in the working-age population within the United States. 

However, the unemployment rate remained stable at 3.8% and did not inch lower despite the upbeat nonfarm payrolls. On the other hand, the average hourly earnings rose 0.2%, missing analysts' consensus estimates of a 0.3% increase. 

The Canadian data shows that the country’s unemployment rate remained stable at 5.5% but was better than the analysts' estimates of 5.6%. The USDCAD currency pair initially fell as the Canadian dollar rallied higher against the US dollar, driven by the upbeat labour market data. 

The USDCAD pair was back trading lower as I wrote the article and had shifted from gains to losses as the loonie strengthened against the greenback. 

Analysts at Wells Fargo said in a note: “Today's report drove yet another increase in Treasury yields and fanned the flames that the FOMC may hike the federal funds rate one more time at one of its two remaining meetings of the year. Another rate hike before the end of the year is a possibility, but for now, our base case remains that the last rate hike of the tightening cycle occurred in July.”

USDCAD price chart. 

The USDCAD currency pair was trading down 28.2 pips (0.21%) as the US dollar fell against its Canadian peer.