Investing.com –The Canadian dollar weakened on Friday after an unexpectedly sharp decline in employment reinforced concerns about the domestic economy and reduced expectations for a Bank of Canada interest-rate hike this month, while falling oil prices added pressure to the commodity-linked currency.
The U.S. dollar was quoted at around C$1.4280, up 0.37%, in the latest market snapshot available for this update. However, the exact USD/CAD rate at 10:39 a.m. ET could not be independently verified against a timestamped Investing.com quote.
Canada’s economy lost 68,300 jobs in September, Statistics Canada reported, sharply missing economists’ expectations for a gain of 9,200 positions. The decline followed a loss of 41,700 jobs in August, bringing employment losses to 110,000 over two months. The unemployment rate rose to 6.5% from 6.4%.
The disappointing report complicated the Bank of Canada’s policy outlook ahead of its October 28 meeting. A weakening labour market could discourage policymakers from raising interest rates, even as persistent inflation risks and elevated energy prices remain concerns. Investors will assess whether the employment decline signals a broader deterioration in economic momentum.
Job losses were concentrated in the public sector, particularly healthcare, social assistance and education, while manufacturing employment declined by 12,700 positions. Employment among young people aged 15 to 24 fell by 48,000, highlighting the uneven pressure across the labour market.
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Wage growth offered a partial counterpoint to the weak employment figures. Average hourly wages for permanent employees rose 2.3% year over year in September, accelerating from 2.0% in August. Continued wage growth could complicate the central bank’s assessment of inflation even as weaker hiring points to softer demand.
Oil prices also weighed on the Canadian dollar. Brent crude fell towards $103 a barrel and U.S. West Texas Intermediate traded near $91 after U.S. President Donald Trump said Washington would not attack Iran before the November midterm elections, easing immediate concerns about supply disruptions in the Middle East.
Lower oil prices can reduce support for the Canadian dollar by weighing on export revenues and the country’s terms of trade. However, the currency’s direction also depends on U.S. dollar demand, bond yields and the relative outlook for interest rates in Canada and the United States.