Canada loses 68.3K jobs and the Loonie falls to an 18-month low

USD/CAD spikes to just under 1.4300, an 18-month high, as Canada sheds jobs.
Two monthly job losses wipe out Canada's 2026 gains, and BoC hike bets fall.

Canada lost 68.3K jobs in September against a forecast for a 7K gain, and with August's 41.7K loss it has given back all of its net job gains for 2026. The unemployment rate rose to 6.5%, exactly the forecast, because about 53K people left the labour force, the count of everyone working or looking for work. Had they stayed in it, the rate would have been near 6.8%, so the one figure in the release that hit its forecast got there by counting fewer people.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Traders cut their bets on a Bank of Canada (BoC) hike on October 28 and now see the next one in December. The BoC's 2.25% stays at least 1.5 points under the Fed's 3.75%-4.00%, and that gap is what USD/CAD has climbed on since early September.

The University of Michigan (UoM) sentiment index fell to 46.3 against a 47.6 forecast, its second-lowest reading on record. Year-ahead inflation expectations in the same survey rose to 4.7% and the 10-year Treasury yield held above 5.25%, so USD/CAD ticked up on the release rather than down.

USD/CAD made the move in one five-minute bar on the jobs release, from below 1.4250 to just short of 1.4300, the pair's highest level since early April 2025. Friday's low near 1.4200 and high just under 1.4300 are the bottom and top of the range USD/CAD has traded in since October 1, and the high only just cleared Monday's.

On the charts

The pair has given back about a third of the spike since and has held above 1.4250, including on the UoM release. Friday's high is the top of a climb that started at the September 8 low just above 1.3750.

USD/CAD 5-minute chart

Canadian Dollar FAQs

What key factors drive the Canadian Dollar?

The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

How do the decisions of the Bank of Canada impact the Canadian Dollar?

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

How does the price of Oil impact the Canadian Dollar?

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

How does inflation data impact the value of the Canadian Dollar?

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.

How does economic data influence the value of the Canadian Dollar?

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.

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