In November, Canada added 54,000 new jobs, lowering the unemployment rate to 6.5%. This exceeded expectations for a decrease in job numbers and contributed to a 0.4 percentage point drop in unemployment.<\/p>\n
Wage growth for permanent workers remained steady at 4.0% year-on-year. The continued job growth from previous months has set a three-month average trend of 60.2k jobs added, reinforcing a strong labour market.<\/p>\n
Despite the data, analysts anticipate the Bank of Canada (BoC) will maintain the current interest rate of 2.25% through the following year. This aligns with expectations that the BoC might prioritise inflation risks due to the stronger job market conditions.<\/p>\n
The positive employment figures led to increased market activity and a sell-off across the yield curve. Front-end yields rose by 16 basis points, and cross-currency spreads saw their widest margins in several years. While the market has factored in potential rate hikes for 2026, projections still suggest the BoC will hold steady until early 2027.<\/p>\n
The market is overreacting to the November jobs surge, creating a clear opportunity for traders. While the addition of 54,000 jobs and a drop in unemployment to 6.5% sent bond yields spiking, we believe the Bank of Canada will look past this single report. The prevailing view should be that the Bank will remain on hold at 2.25% through 2026.<\/p>\n
This disconnect suggests positioning for a reversal in short-term interest rates. The sell-off, which pushed front-end yields up 16 basis points, is excessive and provides an attractive entry point to bet against future rate hikes. Traders should consider instruments sensitive to BoC policy, such as Three-Month Canadian Bankers’ Acceptance Futures (BAX), expecting their prices to recover as hike expectations fade.<\/p>\n
For currency traders, the Canadian dollar’s sudden strength may be short-lived. This jobs report will likely be viewed by the BoC as just one data point, especially with core inflation having trended down to 2.8% in the latest October 2025 reading, moving closer to the Bank’s 2% target. We see value in fading this CAD rally against the US dollar, as a dovish tone from the BoC in the coming weeks could erase these recent gains.<\/p>\n
We have seen this pattern before when looking at data from 2024. After a similar string of strong economic reports in the spring of that year, the market priced in aggressive rate hikes that never materialized. The Bank of Canada held steady then, rewarding traders who correctly anticipated its patient approach to policy.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Canada added 54,000 jobs in November, lowering unemployment to 6.5%, reinforcing a strong labour market trend.<\/p>\n","protected":false},"author":62,"featured_media":17026,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36147","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\/36147","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=36147"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/36147\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17026"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=36147"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=36147"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=36147"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}