USD/CAD falls to near 1.3800 ahead of US Nonfarm Payrolls

• USD/CAD loses ground as the US Dollar struggles on rising odds of a Fed rate cut in September.
• The US Nonfarm Payrolls are expected to rise by about 75,000 in August.
• Canada announced plans to provide financial assistance to domestic producers affected by US tariffs.

USD/CAD halts its four-day winning streak, trading around 1.3810 during the Asian hours on Friday. The pair depreciates as the US Dollar (USD) faces challenges, driven by softer-than-expected United States (US) job data. Traders are awaiting further labor market data that could shape the US Federal Reserve's (Fed) policy decision in September. Economists project that US Nonfarm Payrolls will add about 75,000 jobs in August, while the Unemployment Rate is seen at 4.3%.

Any further weaker data would boost the odds of a Federal Reserve rate cut in September, which could put downward pressure on the Greenback. The CME FedWatch tool indicates a pricing in more than 99% of a 25-basis-point (bps) rate cut by the Fed at the September policy meeting, up from 87% a week ago.

The US Initial Jobless Claims rose to 237K for the week ending August 30, against the previous reading of 229K. This figure came in above the market consensus of 230K. Meanwhile, ADP Employment Change showed that employment rose by 54,000 in August, which came in below the expectation of 65K. This reading followed a 106K (revised from 104K) increase recorded in July.

US President Donald Trump said that his administration would impose tariffs on semiconductor imports from firms not moving production to the United States, Reuters reported late Thursday. Moreover, the Trump administration is set to begin renegotiating the US-Mexico-Canada free trade deal, according to The Wall Street Journal.

Canada announced plans to provide financial support for domestic producers hit by US tariffs, with a focus on the steel, aluminum, and automobile sectors. Industry Minister Mélanie Joly said, "We're working hard to support these industries, and more measures will be announced soon." Meanwhile, Prime Minister Mark Carney added that negotiations with the US are now concentrated on these sectors, emphasizing their strong supply-chain integration.

Traders will likely observe Statistics Canada's labor market report later in the North American session. Canada's Net Change in Employment is expected to see 7.5K jobs added in August, following a decline of 40.8K in the previous month. Meanwhile, the Unemployment Rate may rise to 7% from 6.9%.