- The Unemployment Rate in Canada drops to 6.9% in June.
- USD/CAD recedes to the 1.3650 region following the data release.
Statistics Canada reported on Friday that the Unemployment Rate in Canada ticked lower to 6.9% in June, below market consensus.
The Net Change in Employment exceeded estimates to 83.1K during this period, a substantial increase after the 8.8K gain in May. The data also indicated that the Participation Rate rose from 65.3% to 65.4% and that Average Hourly Wages eased to 3.2% YoY, down from 3.5% in the previous month.
Market reaction
The Canadian Dollar (CAD) now trims part of its earlier losses on Friday, prompting USD/CAD to recede to the mid-1.3600s in the wake of the Canadian labour market report.
Canadian Dollar PRICE Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.04% | 0.53% | 0.41% | 0.02% | -0.04% | 0.25% | -0.09% | |
| EUR | -0.04% | 0.48% | 0.38% | -0.04% | -0.01% | 0.20% | -0.13% | |
| GBP | -0.53% | -0.48% | -0.10% | -0.52% | -0.47% | -0.23% | -0.64% | |
| JPY | -0.41% | -0.38% | 0.10% | -0.40% | -0.46% | -0.19% | -0.53% | |
| CAD | -0.02% | 0.04% | 0.52% | 0.40% | -0.01% | 0.22% | -0.13% | |
| AUD | 0.04% | 0.00% | 0.47% | 0.46% | 0.00% | 0.35% | -0.12% | |
| NZD | -0.25% | -0.20% | 0.23% | 0.19% | -0.22% | -0.35% | -0.38% | |
| CHF | 0.09% | 0.13% | 0.64% | 0.53% | 0.13% | 0.12% | 0.38% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
This section below was published as a preview of the Canadian labour market report at 05:00 GMT.
- The Unemployment Rate in Canada is expected to rise further in June.
- Further cooling in the labour market could favour additional rate cuts.
- The Canadian Dollar remains sidelined around 1.3600 against the US Dollar.
On Friday, Statistics Canada will release the results of the Canadian Labour Force Survey. Market investors predict that the report will come in on the soft side, which might encourage the Bank of Canada (BoC) to resume its easing cycle.
The BoC kept its policy rate at 2.75% at its June meeting, following the same move in April and the 25-basis-point cut in March. Back to the previous meeting, the central bank justified its decision to hold rates steady due to the elevated uncertainty surrounding the White House’s erratic trade policy.
The central bank also suggested that another rate cut could be necessary in July if tariffs cause the economy to weaken. Governor Tiff Macklem reiterated that ongoing uncertainty about the effects of tariffs, the outcomes of trade negotiations, and any new trade measures would constrain the bank’s ability to look far ahead.
He observed that, although first-quarter growth had exceeded expectations, business investment and domestic spending remained largely subdued, and he warned that second-quarter growth would be substantially weaker, a view shared by economists who predicted that this subdued trend was likely to persist.
According to Statistics Canada, the Employment Change increased by 8.8K jobs in May, building on April’s 7.4K gain, while the Unemployment Rate rose for the third consecutive month to 7.0%.
At its most recent meeting, the central bank noted that the labour market had weakened, with job losses concentrated in trade-intensive sectors. The BoC added that employment had so far held up in sectors less exposed to trade but warned that businesses were generally indicating plans to scale back hiring.
What can we expect from the next Canadian Unemployment Rate print?
Consensus among market participants projects a slight rise in Canada’s Unemployment Rate to 7.1% in June, up from 7.0% in May. Additionally, investors forecast the economy will add no jobs in the same month, reversing May’s 8.8K increase. It is worth recalling that Average Hourly Wages, a proxy for wage inflation, held steady at 3.5% YoY for the third time in a row in May.
According to analysts at TD Securities: “Canadian labour markets will remain under pressure in June, with total employment forecast to hold unchanged as the UE rate rises 0.1 pp to 7.1%. Economic uncertainty continues to weigh on hiring sentiment, with PMIs pointing to more layoffs in the goods sector, and our forecast would see the 6m trend slip to just 10k/month. Wage growth is projected to hold steady at 3.5% y/y.”
When is the Canada Unemployment Rate released, and how could it affect USD/CAD?
The Canadian Unemployment Rate for June, accompanied by the Labour Force Survey, will be released on Friday at 12:30 GMT.
The BoC could potentially lower its interest rate at its next meeting due to the further cooling of the labour market, which could also lead to some selling pressure on the Canadian Dollar (CAD). This should support the ongoing rebound in USD/CAD that was sparked last week.
Senior Analyst Pablo Piovano from FXStreet notes that the Canadian Dollar had given up some of its recent gains, causing USD/CAD to rise from levels last observed in early October 2024 in the 1.3550-1.3540 band to the vicinity of 1.3700 the figure at the start of the week.
Piovano indicates that the resurgence of the bearish tone could motivate USD/CAD to revisit its 2025 bottom at 1.3538, which was marked on June 16. Once this level is cleared, it could be followed by the September 2024 trough of 1.3418 and the weekly base of 1.3358 that was reached on January 31, 2024.
He mentions that if bulls gain stronger confidence, it might drive the spot price to its provisional barrier at the 55-day Simple Moving Average (SMA) of 1.3755, followed by the monthly ceiling of 1.3797 reached on June 23, and then the May peak of 1.4015 recorded on May 13.
Piovano notes that, when considering the broader picture, further losses in the pair were likely below its key 200-day SMA at 1.4038.
“Furthermore, momentum indicators appear mixed: the Relative Strength Index (RSI) hovers around 50, while the Average Directional Index (ADX) is around 17, indicating some loss of impetus in the current trend,” he says.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
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