• USD/CAD shows volatility after a weak Employment report.
• Canada’s labor market was squeezed and the wage growth measure decelerated in July.
• The US Dollar declined on expectations that the Fed will cut interest rates in September.

The USD/CAD pair delivers volatile moves above the round-level support of 1.3700 after the release of the weak Canadian Employment data for July. Statistics Canada reported that the labor market unexpectedly squeezed by 2.8K. Economists expected fresh addition of 22.5K payrolls against lay-off of 1.4K workers in June. The Unemployment Rate rose steadily by 6.4%, remained lower than estimates of 6.4%.

Weak Canadian labor market data has prompted expectations of more rate cuts by the Bank of Canada (BoC). Currently, the BoC has delivered two back-to-back rate cuts by 25 basis points (bps) to 4.5% since June.

Apart from weak payrolls data, annual Average Hourly Wages, a key measure to wage growth that propels consumer spending and eventually influence price pressures, decelerated to 5.2% from the former release of 5.6%. This would also increase speculation of more BoC rate cuts.