USD/CAD continues winning streak near 1.3850 amid rising rate cut bets by Fed, BoC

• USD/CAD gains ground as the US Dollar recovers its recent losses from the previous session.
• CME FedWatch tool indicates a pricing of 92% of a 25-basis-point Fed rate cut in September, following the August jobs data.
• The Canadian Dollar came under pressure as disappointing jobs data fueled expectations of Bank of Canada policy easing.

USD/CAD continues its winning streak for the sixth consecutive session, trading around 1.3840 during the Asian hours on Monday. However, the upside of the pair could be restrained as the US Dollar (USD) could face challenges amid rising United States (US) Federal Reserve (Fed) rate cut bets, following weaker-than-expected jobs data for August.

The US Bureau of Labor Statistics (BLS) reported on Friday that the US Nonfarm Payrolls (NFP) climbed by 22,000 in August, falling short of the market expectations of 75,000. This figure followed the 79,000 increase (revised from 73,000) recorded in July. Meanwhile, the Unemployment Rate increased to 4.3% August, as expected, against the 4.2% prior.

The CME FedWatch tool indicates a pricing in 92% of a 25-basis-point (bps) rate cut by the Fed at the September policy meeting, up from 86% a week ago, with bets rising on a potential 50 bps reduction this month.

The USD/CAD pair gained support as the Canadian Dollar (CAD) faced challenges after disappointing jobs data bolstered hopes for Bank of Canada (BoC) policy easing. Net Change in Employment showed an unexpected loss of about 65.5K positions in August, against the expected 7.5K new jobs. The Canadian employment continued to decline after July's losses of 40.8K jobs. Meanwhile, the Unemployment Rate jumped to 7.1% from 6.9% prior, surpassing the expected 7.0%.