The Canadian dollar slipped to a 12-day low, pressured by falling oil prices and rising uncertainty around the U.S. Federal Reserve’s next interest rate move.
The decline followed a surprise announcement from the U.S. Bureau of Labor Statistics (BLS), which cancelled the highly anticipated October payrolls report. As markets digested the missing data and shifting monetary expectations, the Loonie weakened 0.5%, trading at 1.40 per U.S. dollar or 71.12 U.S. cents. It briefly touched 1.4065 and then made the steepest single day decline since July 7.
U.S. Jobs Report Cancelled, Shaking Market Confidence
The BLS confirmed it will not publish October’s employment report due to delays caused by the 43-day U.S. government shutdown. Instead, the October payrolls will be combined with November’s numbers, scheduled for release on December 16 – after the Federal Reserve’s December 9–10 policy meeting.
The absence of this crucial dataset has significantly reshaped expectations for a potential rate cut. Osborne added that expectations for a rate cut could fall to “effectively zero” unless September payroll data, due Thursday, comes in extremely weak. With traders recalibrating their expectations, the U.S. dollar index (DXY) rose, supported by risk-off sentiment and concerns over missing economic indicators.
Current market pricing shows a 73% probability that the Fed will leave interest rates unchanged in December. This upward pressure on the U.S. dollar contributed further to the Loonie’s weakness.
Oil Prices Fall 2.1%, Adding Pressure on the Loonie
Oil, one of Canada’s most critical exports, also faced downward pressure. Crude prices slid 2.1%, settling at $59.44 per barrel. A report suggesting the U.S. may be pursuing a proposal to end the Russia-Ukraine war led to speculation of improved stability in energy markets, prompting traders to scale back oil-demand expectations.
Since the Canadian economy is closely tied to commodity performance, the drop in oil quickly translated into currency weakness.
Bank of Canada Expected to Hold Rates Steady
On the domestic front, the Bank of Canada (BoC) is widely expected to keep interest rates unchanged next month. The central bank recently called for a coordinated, economy-wide approach to improve Canada’s lagging productivity—an issue becoming more pressing amid shifting U.S. trade policies and global competitiveness challenges.
Canadian government bond yields were mixed across the curve, with the 10-year yield steady near 3.249%, reflecting investor caution ahead of fresh data.
Outlook: Markets Await September Jobs Data for Clarity
The Loonie’s decline underscores the uncertainty gripping global markets. With October’s U.S. employment report off the table, traders are now sharply focused on November 20, delayed September jobs data, which could influence the Fed’s tone heading into December.
Until then, the Canadian dollar remains vulnerable to:
- Further movements in oil prices
- Shifts in Fed policy expectations
- Global risk sentiment
- Domestic economic guidance from the Bank of Canada
As markets navigate missing data, the geo-political developments, and declining energy prices, volatility in the CAD/USD pair is likely to remain elevated.
Helene Elliott is the senior reporter for News Raise. She covers Science news. She also has a keen interest in photojournalism. Helene holds a nomination for the prestigious Red Smith Award. She is married to author Dennis D’Agostino, a former publicist with the New York Mets.
