Canadian dollar hits 18-month low as jobs data clips rate hike bets
FXC•The Canadian dollar fell to an 18-month low after Canada reported a loss of 68,300 jobs in September, reducing the perceived chance of an October 28 Bank of Canada rate hike to 25% from 40%.
1. Jobs report weighs on loonie
The Canadian dollar weakened 0.4% to 1.4275 per U.S. dollar on Friday, after touching 1.4298, its weakest level since April 2025. Canada’s economy shed 68,300 jobs in September, against economists’ forecasts for a 9,200-job increase, while unemployment rose to 6.5% from 6.4% in August.
2. Rate expectations fall
Investors saw a 25% chance of a Bank of Canada rate increase on October 28, down from 40% before the employment report. BMO Capital Markets chief economist Douglas Porter said the employment data clouded the outlook and that the appropriate central bank stance was “watchful waiting.”
3. Bond yields decline
Canadian government bond yields fell across the curve. The two-year yield dropped 6.8 basis points to 3.183%, widening its gap below the equivalent U.S. rate to about 161 basis points, the largest since February 2025.
