US Jobs Surprise Revives Rate Hike Bets as Loonie Takes a Hit
US job numbers exceeded expectations in August, adding 162,000 new positions and boosting chances of a Federal Reserve rate hike. The unemployment rate remained at 4.1%, while labor force participation edged up to 61.6%. Wage growth held steady at 0.3% month over month and eased slightly to 3.1% annually.
The strong jobs report triggered a rally in the US dollar, with the DXY index rebounding from a weekly low near 98.92 to trade around 99.3. The Canadian dollar, however, took a hit after Canada lost 41,700 jobs in August, reversing previous gains and pushing the loonie sharply lower.
The Mexican peso outperformed other major currencies, gaining 0.69% and pushing USD/MXN to a fresh cycle low near 16.89. Banxico's decision to hold rates at 6.50%, alongside its concern over upside inflation risks, should preserve support for the peso in the short term.