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The Canadian Dollar (CAD) is under pressure against the US Dollar (USD) on Thursday, with the Greenback holding firm as markets scale back expectations of a December interest rate cut by the Federal Reserve (Fed). At the time of writing, USD/CAD is trading around 1.4074, hovering near a two-week high amid broad USD strength.

The delayed September US labour report delivered a mixed but generally Dollar-supportive tone. Nonfarm Payrolls (NFP) rose 119K, comfortably beating the 50K forecast, while August was revised to a 4K decline instead of the previously reported 22K gain. The Unemployment Rate ticked up to 4.4% versus expectations for 4.3%, and the Labour Force Participation Rate improved to 62.4%.

Wage data came in softer than projected, with Average Hourly Earnings rising 0.2% MoM compared with the 0.3% estimate. On an annual basis, earnings increased 3.8% YoY, marginally above the 3.7% forecast. Average Weekly Hours remained steady at 34.2.

However, with the October jobs report postponed, the September dataset has taken on greater importance ahead of the Fed’s December 9-10 meeting. The US Dollar continues to find demand as markets reassess the Fed’s near-term policy outlook. Traders now assign only a 39% probability of a December rate cut lower than the roughly 50% priced a week ago.

Hawkish commentary from Federal Reserve officials also supported the cautious policy outlook. Cleveland Fed President Beth Hammack warned that cutting rates too early could distort market pricing and prolong inflation, while Fed Governor Michael Barr said policymakers must tread carefully, balancing support for the labour market with the need to bring inflation back to the 2% target. Barr added that he remains concerned that inflation is still running near 3%.

In Canada, producer price data offered a generally firm picture for October. Statistics Canada reported that the Industrial Product Price Index (IPPI) rose 1.5% month-over-month, marking the fifth straight monthly increase. The Raw Materials Price Index (RMPI) also climbed 1.6%, supported by higher prices for metal ores and concentrates, although crude energy prices declined amid persistent global oversupply. While the data point to rising cost pressures within Canada’s industrial sector, they failed to meaningfully support the Loonie.

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