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The Canadian Dollar rallied against the Dollar, Pound, Euro and all other G10 currencies after Canada created more than three times the number of jobs in September than the market had expected.

Statistics Canada said 63.8K jobs were added to the labour force, topping the market's expectation for just 20K, however, analysts note some of the details contained in the report are quite weak which could limit the CAD's upside potential.

The beat was nevertheless sizeable enough to initially firm expectations for Canada's interest rates to remain set at higher levels for an extended period, which had the effect of aiding the Canadian Dollar.

CAD also benefited from a positive correlation with the U.S. Dollar which soared following the release of a bumper jobs report south of the border.

The developments left the Pound to Canadian Dollar exchange rate a third of a per cent down at 1.6656 in a move that dented the pair's short-term recovery. Against the U.S. Dollar, the Canadian unit was 0.13% higher at 1.3686 and against the Euro the gain stood at 0.44% with EUR/CAD seen at 1.4396.

"Wage growth remained stronger than policymakers would like to see, ticking up slightly to 5.3% relative to consensus forecasts for a 5.1% rate," says Andrew Grantham, an economist at CIBC Bank.

Although the headlines were strong Grantham says there was some weakness contained in the data, which could ultimately limit implications for the Bank of Canada and the market's enthusiasm for a CAD rally.

"The increase in jobs was not exactly broad-based, and instead largely driven by a 66K gain in education which can be volatile at this time of year," notes Grantham.

Above: CAD performance Oct. 06 following the Canadian jobs report.

Increases in other areas such as transportation & warehousing were broadly offset by declines in other areas, including finance, real estate & leasing.

"Overall employment growth was also tilted more towards part-time than full-time in September," notes Grantham. Furthermore, he points out that the 5.3% increase in wages still reflects some of the previous tightness in the labour market as well as wage adjustments following last year's surge in inflation.

"With the unemployment rate off last year's lows and job vacancies continuing to fall, wage inflation could ease fairly quickly next year," he says.