The Canadian dollar weakened to about 1.3862 against the U.S. dollar, up roughly 0.5% on the day after briefly slipping below the 1.38 mark. The move follows a sharp divergence in labour market data between the two neighbours.
Statistics Canada reported that the Canadian economy lost 41,700 jobs in August, a stark contrast to market expectations of a 15,000‑job gain. The unemployment rate held at 6.4% and the employment‑rate fell to 60.8%, down 0.1 percentage point. Job losses were concentrated among young workers (19,000) and core‑aged employees (16,000). While services‑producing sectors shed jobs, manufacturing posted a gain of 22,000 positions. Average hourly wages rose 2% year‑on‑year, slowing from a 2.8% increase in July.
In the United States, the labour market remained robust, with employers adding 162,000 jobs in August and the unemployment rate staying at 4.1%. The stronger U.S. payrolls reinforced expectations that the Federal Reserve will keep rates elevated for an extended period.
Alex Tsepaev, chief strategy officer at B2PRIME Group, said the unexpected Canadian job losses increase pressure on the loonie and could limit the Bank of Canada’s ability to adopt a more hawkish stance. He added that the solid U.S. jobs report raises the likelihood of a prolonged Fed rate‑hike cycle, widening the rate‑differential advantage for the U.S. dollar.
Statistics Canada also noted that Canadian exporters dependent on U.S. demand face heightened uncertainty, citing recent U.S. tariff measures as an additional risk factor for the economy.
