The Canadian dollar depreciated to nearly 1.41 per USD in November, pressured by weaker-than-expected domestic labor data and stronger US employment figures. Canadian employment fell by 4,700 in October, an improvement on September’s 68,300 decline but short of market expectations for a 13,600 gain. Private-sector employment dropped by 53,000 (-0.4%), marking its first contraction since February. Signs of a softening labor market may encourage the Bank of Canada to cut interest rates to bolster economic activity and support hiring, thereby diminishing the relative attractiveness of Canadian assets.
Even so, Canada’s GDP expanded by 0.8% in Q2 2026, up from a 0.1% increase in Q1. In contrast, US nonfarm payrolls rose by 165,000, surpassing forecasts and strengthening expectations of a wider US–Canada interest-rate differential, which favors the US dollar over the loonie. At its most recent meeting, the BoC raised its policy rate by 25 basis points to 2.5%, its first rate hike since 2023. Annual inflation stood at 3.1% in September, just below the consensus forecast of 3.2%.
