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• The Canadian Dollar shed 0.4% against the Greenback on Friday.
• Canada saw a worse-than-expected print in net new jobs additions in October.
• Average Canadian wages also rose, maintaining upward pressure on inflation expectations.

The Canadian Dollar flubbed a near-term technical recovery on Friday, as it slumped back into familiar lows against the greenback. The loonie remained under pressure as the Bank of Canada (BoC) continued to keep downward pressure on interest rates in the face of lagging employment figures, though the Canadian central bank is quickly running out of runway as rising wages keep inflation expectations simmering in the background.

Canada reported a much lower-than-expected print in Net Change in Employment in October, entirely missing the mark as job gains continue to wither. Canadian Average Hourly Wages also rebounded, reminding investors of Canada’s ongoing battle with still-high inflation expectations despite overall price growth well outpacing wages across the gamut of timeframes.

Market Movers: Canadian Dollar Slid Back on Missed Jobs Growth

• Canadian Net Change in Employment rose by a scant 14.5 thousand in October, missing the forecast 25,000 and well below September’s 46.7 thousand print.
• Average Hourly Wages also grew 4.9% year-over-year in October, rebounding from September’s slowdown to 4.5%.
• With wages back on the rise, inflation expectations are likely to remain elevated, crimping the BoC’s hopes to single-handedly restart Canada’s growth engine using steep interest rate cuts.
• The US Consumer Sentiment Index also rose on Friday, with November chalking in an upswing to 73.0 in aggregated consumer survey results. Markets anticipated a much more moderate upswing to 71.0 from the previous 70.5.
• Despite a wider miss in Canada’s jobs figures for October, the Canadian Unemployment Rate held steady at 5.5% versus the forecast uptick to 6.6%. However, the on-balance Unemployment Rate print is likely due to long-term unemployed workers dropping out of the unemployment reference period as the Canadian Labor Force Participation Rate continues to sink below 65%.
• Canada’s LFPR last printed at 64.8%, and hasn’t been this low since the global recovery from the COVID-19 pandemic in mid-2020.

Canadian Dollar Price Forecast: Loonie Remained Sticky Near Familiar Lows

The Canadian dollar continued to churn chart paper close to medium-term lows against the US dollar. The USD/CAD currency cross marched to 14-month highs near the 1.3960 level earlier in November, and a sputtering technical recovery in the Canadian dollar coupled with a broad-market strengthening of the greenback kept the pair bolstered north of the 1.3900 handle.

USD/CAD Daily Chart

(Click on image to enlarge)

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