USD/CAD declines toward 1.3600 as soft US labor demand ramps up steady Fed bets

• USD/CAD has been exposed to 1.3600 amid multiple tailwinds.
• The market mood turned upbeat amid no significant escalation in geopolitical tensions.
• Soft labor market data in October is expected to allow BoC to keep interest rates unchanged at 5%

The USD/CAD pair has dropped to near 1.330 and is expected to extend its downside near the round-level support of 1.3600. The Loonie asset is seen remaining vulnerable as the US Dollar has faced an intense sell-off.

S&P500 futures generated significant gains in the London session, indicating cheerful market mood. The market sentiment remains bullish as investors hope that the historically aggressive rate-tightening regime by the Federal Reserve (Fed) has concluded now. The Fed is expected to keep interest rates unchanged in the range of 5.25-5.50% in its December monetary policy meeting.

The US Dollar Index (DXY) fell vertically below the crucial support of 105.00 as soft US labor demand ramped up hops that the Fed will not raise interest rates further. Contrary, the 10-year US Treasury yields rebounded to 4.60%.

Meanwhile, an absence of significant escalation in Middle East tensions has improved the appeal for risk-sensitive assets. However, the rejection of the ceasefire proposal from Israeli Prime Minister Benjamin Netanyahu is keeping hopes of ground assault by Israeli troops in Gaza alive.

On the Canadian Dollar front, soft labor market data in October is expected to allow Bank of Canada (BoC) policymakers to keep interest rates unchanged at 5% in the monetary policy meeting next month.

Statistics Canada reported that laborforce was expanded by 17.5K employees against expectations of 22.5K and September’s reading of 63.8K. The Unemployment Rate rose to 5.7% versus. expectations of 5.6% and the former reading of 5.5%.