FX.co ★ Canadian Dollar Rebounds After Labor Data

The Canadian dollar is showing signs of recovery, strengthening towards 1.365 per US dollar. This development eases some of the losses experienced since the end of January when the currency briefly hit its highest value in 16 months. The recent improvement is attributed to strong labor data, reducing concerns over Canada's growth prospects and monetary policy, and lessening the expectations for aggressive interest rate cuts by the Bank of Canada. In January, Canada's unemployment rate decreased to 6.5%, marking the lowest level since September 2024. This was largely due to a significant drop in the number of job seekers and robust performance in full-time employment, which saw a 0.9% increase compared to the previous year. Wage growth held steady at 3.3%, indicating that labor cost pressures remain and curbing the likelihood of swift rate reductions. These factors have positively influenced Canadian yields, prompting a reassessment of the BoC’s approach towards rate easing, ultimately supporting the currency. Additionally, the Canadian dollar has benefited from a pause in the US dollar's strength, spurred by weaker US labor statistics.