The Canadian dollar traded around 1.38 per US dollar, pausing its multi session retreat as the greenback’s weakness offset increasing dovish bets for the Bank of Canada after a surprise rise in unemployment. The DXY tracked the drop in short-term Treasury yields after signs of a softer US labour market raised odds of multiple Fed cuts. Meanwhile in Canada bets grew for dovish BoC action after unemployment rose to the highest level since the pandemic of 7.1% in August 2025, above expectations of 7% and up from 6.9% in July. This aligned with the Bank of Canada’s view that abundant labour supply and growth risks from tariffs and US policy uncertainty could further strain the domestic jobs backdrop.
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