The Dow fell 505 points Tuesday, its sharpest single-day decline in weeks, as bond markets kept repricing a jobs report that landed three times bigger than forecast. US employers added 162,000 positions in August against a 53,000 consensus estimate, unemployment held at 4.1%, and the two-year Treasury yield jumped to its highest level since January 2025. The S&P 500 slipped 0.36% to 7,690.84 and the Nasdaq fell 0.36% to 26,410.44.
Why the Canadian Dollar Moved Against Its Own Market's Decline
The TSX Composite fell 213.64 points to 36,300.16 the same day, weighed down by technology, telecommunications and industrials. The Canadian dollar strengthened to 72.62 cents US anyway. A weaker index and a stronger currency on the same trading day looks contradictory until the mechanism is separated by asset: WTI crude closed at $92.72, up on renewed Middle East supply risk, and oil, not the equity selloff, is what is setting the loonie's direction right now. Government of Canada 10-year yields moved to 3.81%, tracking the US Treasury repricing even though Canada's own story, tariff-driven inflation risk rather than a hot jobs market, is different from the one driving US yields higher.
Tuesday's Moves, Side by Side
Set against each other, Tuesday's cross-asset moves show a market repricing US rate expectations while a separate, oil-driven story keeps the Canadian dollar on its own track.
Percentage changes are close-to-close for September 8, 2026. The Canadian dollar was the only asset in this group to move against the broader risk-off tone.
The Fed Meets in a Week, and the Bar Just Moved
The Federal Reserve's next decision lands September 16, and Friday's jobs report changed the odds materially. CME FedWatch pricing showed a 60% probability of a hike after the report, up from an even split beforehand and a sharp reversal from odds near 70% for a hold as recently as early August, when a weak July jobs print had pointed the other way.
Canada is not facing the same read. The Bank of Canada held its own rate September 2 and flagged tariff and oil-driven inflation risk rather than a hot labour market, a genuinely different mechanism than the one now pushing US yields higher. That divergence is worth watching in the GoC-Treasury spread over the next week, because a Fed hike on September 16 and a Bank of Canada that is not moving on the same calendar would widen a gap that has already been narrowing.