- USD/CAD turns volatile after the release of the US/Canada Employment report for June.
- US wage growth momentum slowed expectedly while employment numbers beat estimates.
- Canada’s labor market witnessed drawdown while Average Hourly Earnings accelerated.
The USD/CAD pair exhibits wild moves above the round-level support of 1.3600 in Friday’s American session. The Loonie asset turns volatile after the release of the United States/Canada Employment data for June.
The US Nonfarm Payrolls (NFP) report showed that labor demand remained stronger-than-expected. Number of workers hired were 206K, higher than the estimates of 190K but lower than the prior release of 272K. The Unemployment Rate rose to 4.1% from the estimates and the prior release of 4.0%.
Meanwhile, Average Hourly Earnings slowed expectedly. Annually, the wage growth momentum decelerated to 3.9% from the prior release of 4.1%. This has eased fears of price pressures remaining persistent. It would also boost expectations of early rate cuts by the Federal Reserve (Fed). Currently, financial markets expect that the Fed will start reducing interest rates from the September meeting.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, remains on the backfoot near 105.00. 10-year US Treasury yields fall sharply to near 4.30%.
In Canada, the labor market faced an unexpected drawdown as 1.4K employees were laid-off. Economists expected the labor market to have witnessed addition of 22.5K payrolls lower than May’s reading of 26.7K. The Unemployment Rate rose at a faster pace to 6.4% from the estimates of 6.3% and the prior release of 6.2%.
Average Hourly Earnings grew strongly by 5.6% from the former reading of 5.2%. This would diminish expectations of subsequent rate cuts by the Bank of Canada (BoC). The BoC delivered its first rate-cut decision in June after maintaining a restrictive interest rate framework for more than four years.
Economic Indicator
Average Hourly Wages (YoY)
The Average Hourly Wages, released by Statistics Canada, measures the increase in the salaries earned by permanent employees in Canada. Generally speaking, a rise in this indicator has positive implications for consumer spending, which stimulates economic growth. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.
Read more.Last release: Fri Jul 05, 2024 12:30
Frequency: Monthly
Actual: 5.6%
Consensus: -
Previous: 5.2%
Source: Statistics Canada
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