The September employment report came out unexpectedly strong, with the total number of new jobs increasing by 60,000—a significant figure for Canada and well above the forecast of 5,000. Average wage growth remained unchanged at 3.6%, as did the unemployment rate. At the same time, the number of hours worked fell by 0.2% month-over-month, with quarterly growth totaling just 0.4%, which gives reason to expect weak GDP growth for the third quarter.
Nonetheless, the September figures noticeably outperformed the weak data from August, and the Bank of Canada will have to take this into account when formulating its next steps. The upcoming meeting is scheduled for the end of the month, and so far, all indications suggest another rate cut will be delayed. Core inflation remains below target, and the high unemployment rate signals that there is still considerable slack in the economy. For the BoC to proceed with another rate cut, the inflation report for September, due on October 21, would need to show a marked slowdown in price growth.
The U.S. Congressional Budget Office has released its budget review for September. The federal budget deficit for fiscal year 2025 is expected to total $1.8 trillion, just $8 billion below the 2024 deficit. Clearly, higher tariffs have not yielded meaningful results, and according to Treasury Secretary Bessent, the government shutdown is beginning to show effects in terms of economic slowdown.
The currency market remains calm ahead of the anticipated meeting between Trump and Xi, which will determine whether a new round of trade escalation between the U.S. and China is imminent. For now, there is no clear catalyst. The Federal Reserve meeting will take place after the summit, so reduced volatility and sideways trading are expected in the near term.
In the absence of updated CFTC data, the estimated price remains above its long-term average, with no signs of a shift to the downside yet.
As expected, USD/CAD continues to rise and has currently reached the upper boundary of the ascending channel. The likelihood of a technical pullback to the mid-channel area around 1.3930/50 has increased, but from a fundamental standpoint, there is little justification for such a retreat. If the bullish momentum persists—which current factors support—the most likely scenario is continued growth, stable consolidation above the channel boundary, and movement toward the next resistance area of 1.4150/65.
