- The Canadian Dollar declined by 0.4% against the U.S. Dollar on Friday.
- Canada reported weaker-than-expected net new job growth in October.
- Average wages in Canada also increased, keeping upward pressure on inflation expectations.
The Canadian Dollar stumbled on Friday, failing to sustain a near-term technical recovery and slipping back to familiar lows against the U.S. Dollar. The Loonie remains under pressure as the Bank of Canada (BoC) continues to maintain a dovish stance on interest rates amid disappointing employment data. However, the BoC’s room for maneuver is shrinking, as rising wages keep inflation expectations elevated, complicating efforts to manage the economy.
Canada's Net Change in Employment for October came in well below expectations, marking a continued slowdown in job growth. At the same time, Average Hourly Wages rebounded, highlighting Canada's ongoing struggle with inflationary pressures, even as overall price growth continues to outpace wage gains across various timeframes.
Daily Digest: Canadian Dollar Slides on Disappointing Jobs Data
- Canada's Net Change in Employment rose by just 14.5K in October, missing the 25K forecast and falling short of September's 46.7K gain.
- Average Hourly Wages increased 4.9% year-over-year in October, rebounding from September's slower growth of 4.5%.
- With wages rising, inflation expectations are likely to remain elevated, potentially limiting the Bank of Canada's ability to stimulate growth through aggressive interest rate cuts.
- In the U.S., the Consumer Sentiment Index showed improvement, rising to 73.0 in November, above expectations for a modest increase to 71.0 from 70.5.
- Despite the weaker-than-expected jobs data, Canada's Unemployment Rate held steady at 5.5%, far below the anticipated rise to 6.6%. However, this stable unemployment figure may be due to long-term unemployed workers dropping out of the labor force, as the Labor Force Participation Rate continues to decline, recently hitting 64.8%, its lowest level since mid-2020 during the global recovery from the COVID pandemic.
Canadian Dollar Price Forecast: Loonie Sticks Near Recent Lows
The Canadian Dollar (CAD) remains close to medium-term lows against the U.S. Dollar. USD/CAD reached 14-month highs near 1.3960 earlier in November, and despite a faltering technical recovery in the Canadian Dollar, a broad strengthening of the Greenback has kept the pair above the 1.3900 level.
USD/CAD Daily Chart
