Canadian Dollar plunges US jobs boom, domestic employment shrinks

USD/CAD accelerates its rally on Friday, gaining 0.78% to trade around 1.4120 at the time of writing, as stronger-than-expected United States (US) employment figures boost the US Dollar (USD), while disappointing Canadian labour market data weigh on the Canadian Dollar (CAD).

USD/CAD rises by 0.78% on Friday, trading around 1.4120 following contrasting employment reports.

The United States economy adds 165K jobs in October, far exceeding expectations of 65K.

Canada's Unemployment Rate rose to 6.7%, while the economy unexpectedly lost 4.7K jobs.

The US Unemployment Rate declined to 4.1% in October from 4.2% in September.

According to the CME FedWatch tool, markets now price in a nearly 80% chance of a 25-basis-point interest rate hike in December, up from around 70% the previous day.

This shift in expectations provides additional support to the US Dollar, with the US Dollar Index (DXY) rising by 0.74% on Friday to around 102.35 at the time of press.

Although the decline was smaller than September's substantial loss of 68.3K jobs, the Unemployment Rate climbed to 6.7% from 6.5%, exceeding forecasts for an unchanged reading.

The Canadian economy has now lost a total of 114.7K jobs over the past three months, highlighting persistent labour market weakness amid uncertainty surrounding US trade tariffs and their impact on hiring.

Stronger US labour market conditions, combined with weakening Canadian employment, could continue to favour the US Dollar against its Canadian counterpart.