The Canadian dollar weakened past 1.44 per USD, retreating after a brief rebound from the January 2016 low of 1.445 reached on January 3, as markets digested labor data signaling a softening labor market. While December figures revealed a robust net job gain of 91,000 and a decline in the unemployment rate to 6.7%, it remained the second-highest reading since September 2021, magnifying expectations for rate cuts by the Bank of Canada. In contrast, the US dollar remains supported by hawkish Federal Reserve commentary, elevated bond yields, and geopolitical tensions fueling safe-haven demand. The Fed's hawkish stance starkly contrasts with the BoC's dovish outlook, underscoring monetary policy divergence. Furthermore, rising crude oil prices, which often bolster the oil-linked Canadian dollar, have provided limited relief amid US trade policy uncertainties and reduced global risk appetite.
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