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The Canadian Dollar (CAD) climbed sharply on Friday, adding half a percent against the US Dollar (USD) after January labor market data showed the unemployment rate dropping to 6.5%, its lowest reading since September 2024. The Loonie found support despite headline employment falling by 25,000, as a sharp decline in labor force participation drove the jobless rate lower. USD/CAD pulled back toward 1.3634, trimming gains accumulated over recent weeks. Labor market details were mixed. The unemployment rate fell three-tenths of a percentage point to 6.5%, but the improvement came primarily from 94,000 people exiting the labor force rather than from job creation. The participation rate dropped four-tenths to 65.0%, its lowest level since early 2025. Full-time work fell by 27,000, concentrated among core-aged women, while manufacturing shed 28,000 positions; a 1.5% decline that marks the sector’s continued struggle with US tariff impacts. Loonie rebounds on USD weakness The Canadian Dollar’s advance owed as much to broad US Dollar softness as to domestic data. The US Dollar Index (DXY) slipped toward 97.9 on Friday, weighed down by concerns over the US labor market and elevated AI valuations. Fresh US data showed job openings unexpectedly fell to 2020 lows, job cuts hit their highest January total since 2009, and initial jobless claims rose to 231K, well above the 212K forecast. The string of weaker labor data pushed markets to price in Federal Reserve (Fed) rate cuts beginning in June. While the CAD benefited from the Greenback’s pullback, Crude Oil prices offered limited tailwinds. West Texas Intermediate (WTI) barrel prices hovered near $62.50 on Friday, extending losses for the week as easing geopolitical tensions around Iran-US nuclear talks and demand concerns pressured the commodity. Oil markets are set to close their first weekly decline in six weeks, with Iran’s confirmation of negotiations reducing…

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Filed under: News - @ February 6, 2026 8:26 pm