By Ketki Saxena
Investing.com -- The Canadian Dollar weakened against the greenback today, sliding to an almost two-month low against the USD, as the Canadian labour market cooled, lowering bets on the prospect of further rate hikes from the Bank of Canada.
In July, Canada saw a reduction of 6,400 jobs - compared to economist predictions for a gain of around 21,100 positions. The unemployment rate saw a minor uptick to 5.5%.
Following the surprise decline in Canadian jobs, predictions for another rate hike from the Bank of Canada plummeted - down from 80% prior to the jobs release to roughly 40% following the jobs data.
The Canadian currency however gained some support from crude prices, after Saudi Arabia's announcement that it will prolong its production cuts until the end of September.
Meanwhile, the U.S dollar also gave up some gains against a basket of currencies after US data also revealed fewer job additions for July than had been expected.
For the week, the Canadian dollar posted its third consecutive decline, down 0.9% this week following the Fitch downgrade of US credit - which prompted investors to sell off the risk-sensitive Canadian currency.
On a technical level for the pair, analysts at Forex.com note, "If bearish momentum accelerates, further downside could target the 1.3300 handle. The Canadian dollar could remain in oversold territory a while longer, which could support a further decline towards the 1.3250 region. To the upside, the 1.3400 level provides major resistance."
"With both the Fed and BOC in similar positions when it comes to their respective tightening cycles, the Canadian dollar seems like it might be better positioned over the short-term as traders unwind their US dollar bets."
Adding to the CAD bull narrative, data from ING shows that "traders are now net-short USD/CAD for the first time since Jun 01, 2023 when USD/CAD traded near 1.34. Traders are further net-short than yesterday and last week".