USD/CAD trades quietly around 1.4060 in early European hours on Thursday as markets await the delayed US Nonfarm Payrolls (NFP) release for September. The data will be critical in shaping expectations for a potential Federal Reserve (Fed) rate cut next month. Meanwhile, softer crude oil prices continue to pressure the commodity-linked Canadian Dollar (CAD).
Markets brace for delayed us NFP release
The US Bureau of Labor Statistics (BLS) will publish September’s employment report on Thursday after a 43-day government shutdown delayed its release. Economists anticipate 50,000 new jobs, with the unemployment rate expected to remain unchanged at 4.3%. A softer-than-expected reading could reinforce concerns about slowing economic momentum and increase the likelihood of a Fed rate cut.
Fed expectations shift as markets scale back rate-cut bets
A weaker NFP print could undermine the Greenback, but current market pricing suggests traders have already tempered their expectations for a December cut. According to the CME FedWatch Tool, markets now assign a 33% probability of a 25-basis-point (bps) rate reduction in December—down sharply from 63% just a week earlier.
Softer oil prices weigh on the loonie
Crude oil prices edged lower following reports of a US proposal aimed at ending the Russia-Ukraine conflict. The decline in oil is weighing on the CAD, given Canada’s position as the largest oil exporter to the US. Lower energy prices typically exert downward pressure on the Loonie, offering a mild tailwind to USD/CAD.
