Canadian Dollar Sinks to 18-Month Low Against U.S. Dollar After 68,000 Jobs Disappear

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Canada’s dollar had little room for another disappointment. On Friday, October 9, 2026, it slipped to its weakest level against the U.S. dollar in roughly 18 months after Statistics Canada reported a net decline of about 68,000 jobs in September. The unemployment rate climbed to 6.5%, while traders sharply reduced expectations for a Bank of Canada interest-rate increase later in October.

The figures reveal two connected pressures: employers are losing momentum just as elevated borrowing costs and trade uncertainty weigh on confidence. A weaker loonie may help some exporters, but it can also raise the Canadian-dollar cost of imported goods, American travel, and business equipment. For households already worried about employment, the currency’s fall adds another layer of economic unease.

The Loonie Slips to Its Weakest Point Since April 2025

On October 9, the Canadian dollar touched C$1.4298 per U.S. dollar, its weakest intraday level since April 2025. That quote means nearly C$1.43 was needed to buy one American dollar; viewed in reverse, one loonie briefly fetched less than 70 U.S. cents. Reuters reported it trading around C$1.4275, down 0.4% on the day. It was heading for its fifth consecutive weekly decline.

Exchange-rate quotes can appear remote from everyday life until someone makes a purchase in another currency. At a rate near C$1.43, a US$1,000 invoice translates into C$1,430 before bank charges, rather than C$1,400 at a rate of C$1.40. But the market move was about more than shopping costs. Currency traders were reassessing Canadian economic growth and the interest-rate returns available north of the border relative to the United States.

A Jobs Report That Surprised Economists

September’s employment figures were weaker than economists expected. Forecasters surveyed by Reuters anticipated Canada would add about 9,200 jobs. Instead, Statistics Canada’s Labour Force Survey estimated a decline of approximately 68,000 positions, or 0.3%, leaving national employment at about 21.1 million. Full-time employment declined by roughly 35,000, while part-time employment fell by another 33,000, making the losses difficult to dismiss as a problem confined to one type of work.

The headline figure requires careful interpretation. A net loss of 68,000 jobs does not mean exactly 68,000 employees received layoff notices. It describes the change in estimated employment between two months, reflecting hiring, departures and other movements. Statistics Canada bases the survey on roughly 65,000 households and adjusts most estimates for normal seasonal patterns. Individual readings can be noisy, but a second consecutive monthly decline raises questions about the strength of hiring.

Two Bad Months Undo a Promising Summer

September’s decline followed the loss of about 42,000 positions in August. Together, the two consecutive months produced an estimated decrease of roughly 110,000 jobs, reversing much of Canada’s earlier improvement. Employment had climbed by 181,000 from April through July, but the latest reversal left a small net decline for 2026 through September. For job seekers, that change can feel sudden: openings that seemed plentiful in midsummer may look harder to find by autumn.

The broader comparison prevents an overly bleak conclusion. Statistics Canada reported that employment remained roughly 95,000 higher than in September 2025, an increase of 0.5%. But the yearly gain is thin relative to the recent monthly setbacks. Desjardins economists also noted that total hours worked fell 1.5% in September. Some employers cut shifts rather than jobs. For workers, a reduced paycheque can create pressure even when their employment status remains unchanged.

Why a 6.5% Unemployment Rate Doesn’t Tell the Whole Story

Canada’s unemployment rate rose from 6.4% in August to 6.5% in September, remaining below the 6.9% peak reached in April. On its own, such a modest increase might suggest that the labour market was holding up reasonably well. But unemployment measures people without work who remain in the labour force, generally because they are actively seeking employment. Changes in how many Canadians are participating can complicate the headline percentage.

Participation fell to 64.8%, its lowest level since December 1997 apart from the pandemic year of 2020. Statistics Canada emphasized that population aging explains much of the longer-term decline; the trend should not be treated simply as discouraged workers abandoning their searches. Another revealing measure was the job-finding rate, which stood at 30.6%, compared with 32.8% a year earlier. For a displaced worker, finding another job matters more than a slight change in national unemployment.

Young Workers Absorb an Outsized Share of the Losses

People aged 15 to 24 experienced a difficult September. Employment in that group fell by 48,000, or 1.8%, accounting for a large share of the national decline. Youth employment had also fallen in August, bringing the two-month drop to 67,000. Yet the youth unemployment rate remained near 13.0%, partly because fewer young people were participating in the labour force. A steady unemployment rate therefore does not necessarily indicate improving prospects.

The figures have practical consequences for students and recent graduates. Part-time shifts can pay tuition or rent, while a first full-time position often provides experience needed for better opportunities. Statistics Canada reported 28,000 fewer employed women aged 25 to 54, alongside an increase in job seekers in that group. Their unemployment rate rose to 5.3%. The setbacks therefore reached workers early in their careers and amid substantial household responsibilities. Employment uncertainty affects entire families.

Schools, Health Care and Factories All Lose Ground

The steepest industry decline came in educational services, where employment fell by about 35,000 in September. Health care and social assistance lost 23,000 positions, the sector’s first monthly decrease since December 2022. Manufacturing employment declined by 13,000. The losses reached classrooms, care facilities and factory floors rather than being isolated to one corner of the economy. Meanwhile, other services, including repair and maintenance, added approximately 17,000 jobs.

Public-sector employment fell by 70,000 during the month, its fourth straight decline, while private-sector employment was little changed. Some economists linked education losses partly to fewer international students, though the data cannot prove individual causes. Similarly, while tariffs and uncertainty have troubled manufacturers, September’s factory decline cannot automatically be attributed entirely to U.S. trade policy. These statistics show where employment changed, not precisely why each employer reduced staff. Those distinctions matter when assessing whether weakness will persist.

Quebec and British Columbia Fall While Alberta Grows

National employment figures conceal provincial differences. Quebec lost approximately 49,000 jobs in September, a 1.1% decline, following another loss of 19,000 in August. Statistics Canada reported the province had shed about 130,000 positions between January and September. British Columbia lost roughly 20,000 jobs, while Ontario also saw a decrease of around 20,000, a smaller proportional change. National averages mask local pressures.

Alberta moved in the opposite direction, adding approximately 23,000 positions, or 0.9%, in September. Its unemployment rate fell to 6.4%, while Quebec’s increased to 6.0% and Ontario’s stood at 7.0%. Newfoundland and Labrador and Prince Edward Island also recorded smaller employment gains. The contrast matters: a business recruiting in Alberta may face a different labour market from an employer reducing hours in Quebec. The loonie, however, trades on Canada’s overall outlook, not the performance of any single province.

The Bank of Canada’s October Decision Becomes More Complicated

Canada’s central bank is confronting conflicting signals. The Bank of Canada kept its policy rate at 2.25% on September 2, amid inflation and growth uncertainty. After September’s employment report, traders assigned a 25% probability to a rate increase at the October 28 meeting, down from around 40% beforehand, according to Reuters. Those percentages describe market expectations, not decisions the Bank has announced. Labour-market weakness gives policymakers reason to avoid tightening conditions too quickly.

Higher Canadian interest rates can make Canadian-dollar investments more attractive, while delayed increases can widen the return advantage of U.S. securities. On Friday, Canada’s two-year government bond yield fell to about 3.18%, roughly 1.61 percentage points below its American equivalent. That gap was the widest since February 2025. Yet raising rates solely to support the loonie could worsen borrowing strains for households and businesses. The Bank targets inflation, not a particular exchange rate.

A Cheaper Loonie Creates Winners and Losers

For households, a weaker dollar erodes purchasing power. American travel, imported electronics and equipment priced in U.S. dollars can become more expensive after conversion. An importer may pay more for identical American parts. These costs do not necessarily reach store shelves immediately, since businesses may use currency hedges, existing inventory or fixed-price contracts. But prolonged depreciation can feed into consumer prices.

There is another side. Canadian exporters earning U.S. dollars may receive more Canadian dollars for that revenue, while Canada can become less expensive for American visitors. The Bank of Canada describes this as part of the floating exchange rate’s role in absorbing economic shocks. However, its research cautions that weaker exchange rates do not guarantee an export boom; U.S. demand and the cause of the depreciation matter. For families facing job insecurity, gains enjoyed by some exporters may feel distant compared with the cost of purchases.

The Next Data Releases Could Decide Whether the Slide Lasts

Upcoming releases may reveal whether September’s weakness signals a deeper slowdown. Statistics Canada is scheduled to release September consumer inflation figures on October 19, when the Bank of Canada will also publish business and consumer expectations surveys. The October 28 decision includes a new Monetary Policy Report. October employment figures are due November 6. Those releases will help clarify whether policymakers face a greater threat from inflation, weakening demand or a difficult mixture of both.

Currency markets will also track U.S. interest rates, oil prices and trade developments. U.S. dollar strength can further weaken the loonie, while better Canadian employment data could shift rate expectations. The latest figures do not prove that Canada is entering a recession, nor do they guarantee more currency losses. They demonstrate how quickly a disappointing jobs report can reshape expectations, leaving households watching both their employment prospects and the value of their money.

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