The Canadian dollar weakened toward 1.36 per US dollar, retreating from the 16‑month high reached on January 29, as a renewed widening in US–Canada yield differentials drew capital back to the greenback just as domestic data softened. Stronger‑than‑expected US labor figures pushed Treasury yields higher and delayed expectations for Federal Reserve easing until later in the year, bolstering demand for dollar‑denominated assets and enhancing the currency’s carry appeal.
By contrast, Canada’s unexpected January job loss of roughly 24,800 positions, alongside a decline in labor force participation, pointed to cooling momentum at the start of the year and dampened expectations that the Bank of Canada will shift back toward tightening. With the BoC holding its policy rate at 2.25% and offering little in the way of hawkish guidance, the relative interest rate outlook has tilted modestly against the loonie.
