Following the release of labor market data from the United States and Canada, the USD/CAD currency pair saw a significant drop below the key support level of 1.3700. This drop was precipitated by the softening of the US non-farm payroll report (NFP) for October, which resulted in a rapid decline in the US Dollar Index (DXY) and a strong sell-off of the USD/CAD.
According to the US Bureau of Labor Statistics (BLS) report, job recruitment has slowed down and fallen short of expectations. US employers added 150,000 job seekers, which was below the anticipated 180,000 and lower than the 297,000 job positions added in September (revised downward). The unemployment rate increased from the expected 3.8% to 3.9%.
The monthly average hourly wage growth also decelerated to 0.2%, down from 0.3% in September. The annual wage growth rate stood at 4.1%, exceeding the expected 4.0% but falling short of the 4.2% rate from a year ago. The slowdown in job growth may lead Federal Reserve (Fed) policymakers to advocate for ending the rate tightening cycle.
Meanwhile, investors are eagerly awaiting the release of the US October ISM Non-Manufacturing Purchasing Managers’ Index (PMI) at 22:00 Beijing time. The PMI, representing two-thirds of the US economy in the services sector, is expected to decline to 53.0 from its previous value of 53.6.
On the Canadian front, the labor force added 17,500 workers, slightly below the expected 22,500, following September’s impressive 63,800 additions. The unemployment rate increased to 5.7%, exceeding the 5.6% expectation and the previous rate of 5.5%. A soft labor market report may lead the Bank of Canada (BOC) decision-makers to maintain interest rates at 5% during next month’s monetary policy meeting.
