CAD Steadies as Strong US Jobs Data Offset Rising Oil Prices

The Canadian Dollar steadied on Monday as stronger-than-expected US jobs data offset rising crude oil prices. The USD/CAD pair traded near 1.3835 during the early European session.

The US Nonfarm Payrolls (NFP) added 162,000 jobs in August, beating expectations, while the Unemployment Rate held steady during the same period, according to the US Bureau of Labor Statistics (BLS). This has increased market expectations for a Federal Reserve (Fed) rate hike at the September policy meeting, with Fed funds futures now pricing in roughly a 60% probability.

However, Canada's economy lost 41,700 jobs in August, while the Unemployment Rate remained unchanged at 6.4%, according to Statistics Canada. Thomas Ryan, senior North American economist at Capital Economics, stated that 'the sharp 41,700 fall in employment in August and further slowdown in wage growth pushes back against the idea that the economy has decisively turned a corner.'

Escalating geopolitical risk in the Middle East could boost crude oil prices and support the commodity-linked Canadian Dollar (CAD). Iran said it had struck three oil tankers and multiple US-linked ships in the Strait of Hormuz in retaliation for US attacks on its vessels.