USD/CAD advances on soft Canadian employment report

The USD/CAD pair closed with a significant appreciation following the release of weak employment data in Canada. Concurrently, the US Dollar Index (DXY) recorded a notable gain as rising energy prices intensified concerns regarding persistent inflationary pressures.

Canadian employment report exhibits weakness; USD/CAD pair rises
According to data released by Statistics Canada, the unemployment rate rose from 6.5% in January to 6.7% in February, surpassing the consensus forecast of 6.6%. Simultaneously, the employment change recorded a significant contraction of 83,900 jobs, far below the market expectation of a 10,000-job increase and deepening the previous month’s contraction of 24,800. As these figures indicate broad weakness in the domestic labour market, the Canadian dollar depreciated by 0.62% against the US dollar, closing at 1.3718.

In parallel, the US Dollar Index (DXY) appreciated by 0.75% to settle at 100.49—its highest level since May 2025. The greenback has strengthened in recent weeks as escalating energy prices, particularly in oil, gasoline, and natural gas, fuel anxieties regarding a potential rebound in inflation. Market participants anticipate that if headline inflation faces upward pressure, the Federal Reserve may maintain a more “hawkish” or restrictive monetary policy stance. In contrast, the Canadian inflation rate remains closer to the Bank of Canada’s target, sitting at 2.3% as of the January release.