The Canadian Dollar strengthened sharply on Friday after a robust Labour Force Survey lifted sentiment and pushed USD/CAD to its lowest level since September 25. At the time of writing, the pair trades near 1.3889 as investors react to Canada’s surprisingly strong November employment report.
Canada’s jobs data fuels CAD strength
Statistics Canada reported a blockbuster 53.6K job gain in November, far exceeding expectations for a 5K decline and extending a three-month streak of solid job creation following October’s 66.6K increase.
The Unemployment Rate fell to 6.5% from 6.9%, surprising markets that had anticipated a rise toward 7.0%. This marks the largest monthly improvement since late 2021. Wage growth held steady as average hourly earnings rose 4.0% YoY – unchanged from a year earlier – while the participation rate edged down to 65.1% from 65.3%.
The data reinforced expectations that the Bank of Canada will leave interest rates unchanged on December 10. After cutting its policy rate by 25 bps to 2.25% in October, the BoC signaled confidence that its current stance is “about right” for the economy. A Reuters poll earlier in the day showed unanimous agreement among 33 economists that the BoC will hold rates next week, with most expecting settings to remain unchanged at least through 2027.
Focus shifts to US data and Fed expectations
In the United States, markets now turn their attention to a heavy slate of economic releases — including PCE inflation, Personal Income, Personal Spending, and the preliminary University of Michigan Consumer Sentiment and inflation expectations.
These indicators will help shape expectations for the Federal Reserve’s policy trajectory. Investors remain broadly confident that the Fed will deliver another rate cut at next week’s meeting, a view that continues to weigh on the US Dollar and support CAD momentum.
