• The Canadian dollar lost 0.4% against the U.S. dollar on Friday.
• Canada saw worse-than-expected growth in net job creation in October.
• Average wages in Canada also increased, maintaining upward pressure on inflation expectations.

On Friday, the Canadian dollar saw a short-term technical recovery and fell again to known lows against the US dollar. The Loonie remains under pressure as the Bank of Canada (BoC) continues to maintain downward pressure on interest rates amid lagged jobs data, although Canada’s central bank is quickly running out of runway as rising wages keep inflation expectations in the background.

Canada reported a much lower-than-expected print of net changes in employment in October, completely missing the mark as jobs continue to decline. Canada’s average hourly wage also rebounded, reminding investors of Canada’s ongoing battle against still high inflation expectations, despite overall price growth well outpacing wages over the entire time frame.

Daily market recap: Canadian dollar depreciates as job losses augment

• The net change in Canadian employment increased by just 14,500 in October, exceeding the forecast of 25,000. and significantly below the value of 46.7 thousand printed in September.
• The average hourly wage also rose 4.9% year-over-year in October, rebounding from the September slowdown to 4.5%.
• With wages rising again, inflation expectations are likely to remain elevated, dashing BoC hopes of rebooting Canada’s growth engine on its own through keen interest rate cuts.
• The U.S. consumer sentiment index also rose on Friday and rose to 73.0 in November in aggregate consumer survey results. Markets expected a much more moderate augment to 71.0 from the previous 70.5.
• Despite a wider divergence in Canadian employment data for October, Canada’s unemployment rate held steady at 5.5% compared to a forecast augment to 6.6%. However, the print of the balance unemployment rate is likely due to long-term unemployed workers exiting the unemployment reference period as Canada’s labor force participation rate continues to fall below 65%.
• Canada’s most recent LFPR was 64.8%, which has not been this low since the global recovery from the Covid-19 pandemic in mid-2020.

Canadian Dollar Price Forecast: Loonie Remains Steady near Known Lows

The Canadian Dollar (CAD) continues to lose ground near mid-term lows against the US Dollar. In early November, the USD/CAD pair hit 14-month highs near 1.3960, and a keen technical recovery in the Canadian dollar combined with a stronger dollar in the broad market saw the pair strengthen north of 1.3900.

USD/CAD daily chart