The USD/CAD pair dropped to around 1.3620 as the US Dollar weakened following disappointing US data. Private labor demand in the US slowed down, and the Services PMI showed contraction in June. Investors are eagerly awaiting the official US/Canada Employment data for June.
During Wednesday’s American session, the USD/CAD pair fell sharply to nearly 1.3650. This decline was driven by a sell-off of the US Dollar after reports showed that private sector job growth in the US slowed in June, and the Services PMI indicated a contraction in service sector activities.
The ADP Employment report revealed that private employers added 150K jobs, missing estimates of 160K. This has raised concerns about the labor market outlook. Investors are now looking forward to the US Nonfarm Payrolls report for June, which will provide more clarity on the current state of the labor market.
Additionally, the Services PMI dropped to 48.8, below expectations of 52.5. A reading below 50 indicates a contraction in service activities. Other sub-components like Prices Paid and New Orders Index also showed weakness compared to previous readings.
The US Dollar Index (DXY) fell to around 105.30 as a result of these reports.
On the Canadian front, investors are awaiting the Canadian Employment report for June, which is expected to show an increase in the Unemployment Rate from 6.2% to 6.3%. Canadian employers added 22.5K workers, lower than the previous reading of 26.7K.
Strong Employment numbers could reduce expectations of rate cuts by the Bank of Canada (BoC), while weak figures could increase them.