The Canadian dollar is riding a recent rally as cracks start showing in the US labor market. Softer employment data has traders rethinking rate expectations, which typically weakens the greenback and props up the loonie.

Why this matters: When the US job market cools, the Federal Reserve often signals rate cuts or holds steady rather than tightening further. That narrows the interest rate advantage the US dollar has enjoyed, making alternative currencies like the CAD more attractive on a relative basis.

For crypto traders watching macro flows, this kind of currency volatility can signal broader shifts in risk sentiment. A stronger Canadian dollar often comes alongside risk-on sentiment, while USD weakness can either indicate economic concerns or changing monetary policy expectations. Either way, it's worth keeping tabs on labor reports and central bank commentary.