USD Strengthens as NFP Surprises and Market Volatility Rises

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3980-1.4230

Euro                1.6110-1.6360

Sterling           1.8300-1.8550

The CAD/USD is opening at 1.4090 ( 0.7097 )

The USD Index, advanced to its highest level (100.39) since late May on Thursday amid reduced bets for another interest rate cut by the Fed. The expectations were reaffirmed by the delayed release of the US NFP report, which showed that the economy added 119,000 new jobs in September compared to consensus estimates for 50,000 and followed the 4,000 decrease (revised from +22,000) in August. This helps ease concerns about the softening labor market and offsets an uptick in the Unemployment Rate to 4.4% from 4.3%.

The USD bulls, however, pause for a breather on the last day of the week amid growing concerns about the weakening economic momentum on the back of the largest-ever US government shutdown. USD/CAD continues to be undermined by data released earlier this week, which pointed to signs of easing domestic inflation pressures. Furthermore, sustained selling around Crude Oil prices undermines the commodity-linked Loonie and limits the downside for the USD/CAD pair, warranting some caution for bearish traders and positioning for any meaningful decline.

Headlines

• US nonfarm payrolls increased by 119K in September 2025, surpassing forecasts of 50K and rebounding from a 4K decline in August. Gains were led by health care (43K) and food services (37K), while losses occurred in transportation (-25K) and manufacturing (-6K). Unemployment rate rose to 4.4% from 4.3%
• Japan announced a JPY 21.3 Trillion (USD 135 billion, or about 3% of GDP) fiscal package, the largest since the pandemic and larger than 2024’s JPY 13.9 trillion package, much of which was direct payments for price relief for gas and electricity prices, a cash handout for children and aid for regional governments.
• Japan's annual inflation rose 3.0% year-on-year as expected in October 2025 from 2.9% in September, the highest since July. Core inflation was also 3.0% as expected, the highest in three months. Monthly CPI rose by 0.4% as expected, the highest since January.
• US continuing jobless claims rose to 1.974 million for the week ending November 8, 2025, the highest since 2021, indicating slowed hiring. Initial claims dropped by 8,000 to 220,000 for the week ending November 15. The increase suggests reduced hiring rather than more layoffs. Federal workers' claims jumped to 38,867, up 400% from pre-shutdown levels in October.
• Trump removed his 40% tariffs on Brazilian food products, including beef and coffee, initially imposed to penalize Brazil for prosecuting Jair Bolsonaro. This reversal, following a similar move last week, aims to lower US food costs. Effective November 13, it may require refunding duties collected previously. Brazil supplies one-third of US coffee and is a key beef supplier for burgers.

Key Points

• Equities: US slid to one-month lows as AI leaders reversed post-Nvidia gains, Europe inched higher, Asia stayed cautious with Hong Kong flat
• Volatility: IX spikes to 26, SPX drops 1.6%, options expiry today, skew favours puts, Fed tone divides markets
• Digital assets: BTC < $86k; ETH below $2,800, $900m ETF outflows
• Fixed Income: US treasury yields drop on safe haven appeal. Japan’s JGB yields also fall back after recent steep rise
• Currencies: JPY finds modest support from lows
• Commodities: Gold sideways, silver sells off and below key 50 level, crude oil weak