Canada's Job Market Under Scrutiny Today - A Critical Look

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Canada releases its August employment figures alongside the US today, potentially setting the stage for significant market reactions.

CAD Likely to Underperform Among Major Currencies

Employment is expected to increase by a mere 5k positions following July’s concerning 40k decline. Given these volatile numbers, I’m more concerned about the unemployment rate, which at 6.9% already exceeds pre-pandemic levels and could worsen beyond the projected 7.0% - a truly alarming prospect.

While market participants have adjusted expectations for the next rate cut to October, the probability of a September move (15bp) seems significantly underestimated. We might witness a dovish shift after today’s employment data emerges. July’s inflation dropped to 1.7%, falling below target, while core measures hover at a still-manageable 3.0%.

I expect the Canadian dollar to continue trailing behind other major currencies, though general USD weakness should prevent USD/CAD from breaking above the 1.38 threshold in the near term.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

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