Toronto (Rajeev Sharma): The Canadian dollar traded largely flat against its US counterpart on Thursday, hovering near a one-month low as rising geopolitical uncertainty pressured commodity-linked currencies and investors waited for key domestic employment data. The loonie was last seen at 1.3865 per US dollar, or 72.12 US cents, after touching its weakest intraday level since December 5 at 1.3888.
Market analysts attributed the muted movement to a broader shift in risk sentiment. With global tensions increasing, investors have been trimming exposure to risk-sensitive currencies such as the Canadian dollar. Canada’s heavy reliance on commodities, particularly oil, has added to the pressure as crude prices were unsettled by expectations of increased supply from Venezuela. Other commodity-linked currencies, including the Australian and New Zealand dollars, also registered losses, while the US dollar strengthened against a basket of major peers.
Despite signs that the Canadian economy is holding up, concerns persist over trade and labour market conditions. The United States-Mexico-Canada Agreement, which has protected much of Canada’s exports from US tariffs, is due for a joint review in 2026, adding a layer of uncertainty. At the same time, recent job gains have been concentrated in part-time work, pointing to underlying weakness in the labour market.
A recent Reuters poll suggested that the Canadian dollar could strengthen more than previously expected over the coming year if the US Federal Reserve continues to cut interest rates and the USMCA review eases economic uncertainty. However, near-term focus remains on Canada’s December employment report, due Friday, which is expected to show a loss of 5,000 jobs and an uptick in the unemployment rate to 6.6 per cent.
Earlier data showed Canada posting a smaller-than-expected trade deficit in October, while the share of exports destined for the United States fell to its lowest non-pandemic level on record. Meanwhile, Canada’s 10-year government bond yield edged up by 1.1 basis points to 3.409 per cent.
