Statistics Canada is due to publish September’s Labour Force Survey on Friday at 12:30 GMT, the first report to fully reflect new US tariffs introduced on 22 August. Markets are looking for a mild rebound after August’s 41.7K fall, with consensus centred on about 7K job gains and the unemployment rate edging up to 6.5% from 6.4%. Average hourly wages rose 2% year on year in August, down from 3% in July and 3.7% in June, while attention will also be on full-time employment and participation for signs of slack.
The release lands as the Bank of Canada holds its policy rate at 2.25%, unchanged since October 2025, and as headline CPI sits at 3% year on year in August versus a 2% target. One major bank sees employment up 5K with unemployment steady at 6.4%, while another also forecasts 5K but expects 6.5%. USD/CAD trades near 1.4200; it is above the 100-period SMA at 1.4151 and the 200-period SMA at 1.4003, with the RSI around 45. Resistance is flagged at 1.4232, then 1.4270 and 1.4293, while support levels include 1.4200 and 1.4175 ahead of 1.4100, 1.4025 and 1.4003.
Labour Data Release: Expected Volatility and Trading Strategies
We should prepare for immediate volatility today as the Canadian jobs data is released. With USD/CAD consolidating near 1.4200, a deviation from the expected 7K job addition will likely trigger sharp short-term moves. We recommend using volatility-based derivative strategies, such as buying options contracts, to capitalize on the initial breakout regardless of the direction.
If the data confirms that the new US tariffs are dragging down employment, we expect the Canadian Dollar to weaken further. Under this scenario, a rise in the unemployment rate to 6.5% or higher would likely push USD/CAD past the immediate resistance of 1.4232. Traders should look to buy call options or establish long positions targeting the 1.4293 level in the coming weeks.
Conversely, a surprise positive reading today could revive speculation of a Bank of Canada rate hike on October 28 to combat the sticky 3% inflation. If employment rebounds significantly above 7K, we should target short positions on USD/CAD as it heads toward the 100-period moving average at 1.4151. This would signal that the local economy is temporarily absorbing the trade pressures better than feared.
Tariffs, Wage Growth, and Policy Outlook
Historically, tariff disputes have a lagging but persistent negative impact on Canadian trade and employment. For example, during the 2018 tariff disputes, the Canadian Dollar depreciated by nearly 6% against the US Dollar over a three-month period as export growth stalled. We must factor in this historical trend, which suggests that any CAD rallies in the coming weeks might be short-lived.
We must also closely monitor wage growth, which recently slowed to 2% in August from 3.7% in June. A further decline in wages will give the central bank room to keep rates at 2.25% despite high energy prices. Derivative traders should use the next two weeks to build positions ahead of the October 28 policy meeting, anticipating a cautious stance from policymakers.
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