USD/CAD plummets to fresh two-month lows around 1.2450 on weak US NFP

  • The Canadian labor market is back at pre-pandemic, recovered 3 million jobs.
  • USD/CAD slides below 1.2500 on broad US dollar weakness across the board.
  • A dismal US Nonfarm Payrolls report weakens the greenback.

The USD/CAD is plunging during the New York session, is trading at 1.2477, down 0.58% at the time of writing. Earlier, as the US Nonfarm Payrolls report’s headline showed that fewer jobs were created than expected, the pair plummeted.

The market mood is in a risk-off mode, as witnessed by European and US stock indices, with the majority in the red, except for the FTSE100 and the Dow Jones, rising 0.25% and 0.04%, respectively. Despite the negative market sentiment, risk-sensitive currencies like the loonie, the aussie, and the kiwi are gaining ground against the buck.

Furthermore, the West Texas Intermediate crude oil futures hit $80.00 a barrel for the first time since November 2014, boosting the oil-dependent Canadian currency and exerting downward pressure on the USD/CAD pair.

Meanwhile, the US Dollar Index, which measures the greenback’s performance versus its peers, is down 0.11%, bracing to 94.11, whereas the US 10-year Treasury yield is rising three basis points (bps), sitting at 1.60%.

US Nonfarm Payrolls report overshadowed by Canadian employment data

The US Bureau of Labor Statistics (BLS) released the Nonfarm Payrolls report for September. The reading at 194K was worse than the 500K estimated by most analysts, complicating a potential Quantitative Easing reduction decision by the Federal Reserve to cut stimulus.

At the same time, the Canadian Net Employment Change showed an increase of 157.1K jobs added to the economy, more than the 60K foreseen by economists. Furthermore, with September reading now in the past, Canada has recovered the 3 million jobs lost during the COVID-19 pandemic era. Additionally, the participation rate improved to 65.5%, and the unemployment rate remained unchanged below 7%.



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