USD/CAD recovers some ground near the 1.3370 area in the Canadian bank holiday

• USD/CAD recovers some ground and holds above the 1.3370 mark.
• The Canadian economy unexpectedly lost 6,400 jobs in July.
• The Nonfarm Payrolls report revealed that the US economy added 187,000 jobs in July.

The USD/CAD pair consolidates its recent gains near 1.3370 in the early Asian session. The downbeat Canadian employment data triggers a weakening in the Loonie across the board. Investors will digest the data in this quiet week in terms of economic events ahead of the US Consumer Price Index (CPI) on Thursday.

On Friday, Statistics Canada revealed that the Canadian economy unexpectedly lost 6,400 jobs in July. Meanwhile, the Unemployment rate rose to 5.5%. The figure has increased for three consecutive months since COVID. Additionally, the Canadian Dollar didn’t benefit from an increase in oil prices following the softer Canadian data.

Money markets now anticipate a 28% likelihood of a rate rise in September, down from 32% before the report. Markets now expect another rate rise by the end of the year, down from 80% before the report, according to Reuters. However, investors will keep an eye on inflation and second quarter growth ahead of the next monetary policy meeting scheduled for September 6.

On the US Dollar front, the US employment data showed more indications of a softening labour market. The Nonfarm Payrolls report revealed that the US economy added 187,000 jobs in July. The June figures were revised lower to 185,000, the lowest reading since December 2020.

In addition, the Unemployment Rate decreased to 3.5% from 3.6%, and the annual wage inflation, as measured by the change in Average Hourly Earnings, came in at 4.4%, surpassing the market's forecast of 4.2%. The U6 Unemployment Rate decreased to 6.7%, whereas the Labour Force Participation Rate remained unchanged at 62.6%.

Market participants will digest the data on Friday due to the absence of the economic data release from Canada on the Bank holiday. The attention will shift to the US Consumer Price Index (CPI) for July and the Produce Price Index (PPI) later this week. Market players anticipate a 0.2% monthly increase in US CPI. The data will be critical for determining a clear movement for the USD/CAD pair.