Money markets become convinced September BoC rate cut is coming - and maybe even a large one - in wake of weak U.S. jobs data

The surprisingly weak U.S. jobs report this morning has not only spurred speculation on whether the U.S. Federal Reserve will cut its key interest rate by an aggressive 50 basis points next month - but it also has market players pondering the possibility that the Bank of Canada may need to accelerate its monetary easing as well.

The market was bracing for a weak U.S. nonfarm payrolls report this morning following unexpectedly soft weekly U.S. jobless claims on Thursday.

But it still managed to surprise. Nonfarm payrolls increased by 114,000 jobs last month after rising by a downwardly revised 179,000 in June, the Labor Department’s Bureau of Labor Statistics said. Economists polled by Reuters had forecast payrolls advancing by 175,000 jobs. The unemployment rate increased to 4.3%. Job wage gains also slowed.