USD/CAD declines after encouraging Canadian labor market data

• USD/CAD drops vertically to near 1.3600 as Statistics Canada reported upbeat labor market data.
• The Canadian labor market witnessed new payroll additions of 39,900 in August, more than double expectations of 15,000.
• The US dollar remains firm in business as the US economy is resilient due to cooling inflation and stable labor force growth.

The USD/CAD pair is facing an intense sell-off as Statistics Canada reported better-than-expected labor market data. The Canadian labor market recorded new additions of 39,900 payrolls in August, exceeding expectations of 15,000. In July, there was a decline of 6,400. The unemployment rate remains at 5.5%, while investors expected a higher rate of 5.6%.

The average annual hourly wage rose to 5.2% compared to the previous publication of 5.0%. Decent wage growth could lift consumer spending momentum and keep inflationary pressures firm. This could force the Bank of Canada (BOC) to raise interest rates once again, after keeping them on hold for the last two monetary policy meetings.

Meanwhile, the S&P 500 is expected to open on a flat note, considering mixed signals from futures overnight. The US Dollar Index (DXY) remains well supported near the 105.00 resistance as investors remain mixed between global uncertainty and support for a jump in policy tightening by Fed policymakers Federal (Fed) for September policy meeting.

The dollar remains firm in the company as the US economy remains resilient thanks to cooling inflation and stable labor force growth. Chicago Fed President Austan Goolsbee stated that the central bank’s goal is to push the economy toward a “golden path,” that is, a situation in which inflation recedes without triggering a recession.

The US labor market is strengthening as jobless claims fell below expectations for the third consecutive week. The U.S. Department of Labor reported that people filing for unemployment benefits for the first time fell to 216,000 for the week ending Sept. 1, less than the 234,000 expected and the previous release of 229,000.