What's Happening?
The Canadian dollar has weakened against the U.S. dollar, trading 0.2% lower at 1.3840 per U.S. dollar, following a surprise decline in Canadian employment figures. This marks the loonie's lowest intraday level since August 27. The Canadian economy shed 65,500 jobs in August, significantly missing forecasts of a 10,000 increase, and the unemployment rate rose to 7.1%, the highest since May 2016 outside of the pandemic. This has led to increased expectations that the Bank of Canada will resume its easing campaign, with a 90% chance of a rate cut at the upcoming policy decision on September 17.
Why It's Important?
The weakening of the Canadian dollar and the potential for a rate cut by the Bank of Canada could have significant implications for the Canadian economy and its trade relations, particularly with the U.S. A lower Canadian dollar makes Canadian exports cheaper and more competitive in the U.S. market, but it also increases the cost of imports, potentially affecting inflation. The economic data also reflects broader concerns about the health of the Canadian economy, which could influence investor confidence and economic policy decisions.
What's Next?
Investors and policymakers will be closely watching the Bank of Canada's policy meeting on September 17 for any changes in interest rates. The decision will likely be influenced by ongoing economic data and global economic conditions. Additionally, the performance of the Canadian dollar and its impact on trade and inflation will be key areas of focus.
