Canada’s unemployment rate decreased to 6.5% in November, surpassing market expectations. Employment saw an uptick with an addition of 53.6K jobs, following October’s 66.6K increase. The participation rate slightly reduced from 65.3% to 65.1%, while wages maintained a 4.0% annual growth rate.<\/p>\n
The Canadian Dollar appreciated, driving USD\/CAD to lows near 1.3900. Comparison data shows the Canadian Dollar strengthened most against the Japanese Yen among major currencies. Previous forecasts anticipated a higher unemployment rate of 7% and a stagnant job change from October.<\/p>\n
The Bank of Canada recently cut interest rates to 2.25%, maintaining levels to support the economy. Analysts currently don’t foresee further rate cuts, while some predict a slight rate tightening by 2026. The bank’s aim is price stability through interest rate adjustments, such as quantitative easing and tightening.<\/p>\n
Interest rates influence currency strength, with higher rates attracting global capital and impacting commodities like Gold. The Fed funds rate, important for monetary policy in the US, affects market expectations and is closely monitored by financial analysts.<\/p>\n
The unexpected drop in Canada’s unemployment rate to 6.5% has significantly altered our view for the coming weeks. Markets were positioned for a weakening labour market, but two consecutive months of strong job gains challenge that narrative. This strength makes another interest rate cut by the Bank of Canada highly unlikely at their next meeting.<\/p>\n
We believe this robust employment data forces the Bank of Canada to stay on the sidelines, ending the easing cycle that began earlier in 2025. With core inflation statistics from October 2025 showing a stubborn 3.5%, well above the BoC’s target, the conversation could shift towards policy tightening in early 2026. This data effectively removes the prospect of cheaper borrowing costs that many had anticipated.<\/p>\n
For traders, this points to continued downward pressure on the USD\/CAD pair. We are watching the critical 200-day moving average near 1.3913, and a sustained break below this level would signal further CAD strength. Options strategies like buying CAD calls or selling USD\/CAD call spreads could be effective ways to position for a move towards the 1.3887 support level.<\/p>\n
This outlook is reinforced by the broader economic environment, with WTI crude oil prices firming up above $85 per barrel in the fourth quarter of 2025. This situation is reminiscent of the rapid policy pivots we observed in 2022 when strong economic data forced central banks to abandon dovish stances. The current market may be underpricing the potential for a more aggressive Bank of Canada.<\/p>\n
Beyond USD\/CAD, we see potential in positioning for a stronger Canadian dollar against currencies with more dovish central banks. Given the Bank of Japan’s continued accommodative stance, selling CAD\/JPY put options or establishing long positions could offer value. The data clearly shows the CAD is the strongest performer today, particularly against the Japanese Yen.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Canada’s unemployment fell to 6.5% in November as jobs rose and the Canadian Dollar strengthened.<\/p>\n","protected":false},"author":62,"featured_media":16962,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36139","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/36139","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=36139"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/36139\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16962"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=36139"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=36139"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=36139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}