Will Canada’s Unemployment Rate hold at the expected 6.5% as hiring rebounds?

• Markets expect Canada's Unemployment Rate to hold at 6.5% in October.
• Following September's loss of 68.3K jobs, Canada's economy is forecast to add 13.6K positions.
• Expectations of additional Bank of Canada interest rate increases could shift with the employment report.

The Canadian Dollar (CAD) could take its cue from Friday's October Labour Force Survey, as markets look for a modest employment rebound after September's steep fall. Statistics Canada is scheduled to publish the report at 13:30 GMT, with the Unemployment Rate also in focus. Uncertainty over United States (US) tariffs continues to cloud Canada's labour market, weighing on hiring prospects in industries sensitive to trade. After nearly 110K jobs were lost across August and September, investors will scrutinise the data for evidence that employment conditions are stabilising. 

According to Royal Bank of Canada (RBC), public-sector roles, notably in education and healthcare, accounted for most of September's employment losses, rather than industries with direct exposure to US tariffs. Pointing to early indications of stronger hiring demand in October, RBC suggests that trade restrictions may have interrupted the labour market's recovery without causing a wider deterioration.

The Bank of Canada's (BoC) benchmark interest rate increase on 28 October, its first in more than three years, adds to the significance of the employment data. Further monetary tightening remains an option, although the central bank's next decisions will be guided by incoming figures on economic growth and inflation.

A jobs report that beats expectations could therefore strengthen the case for further BoC interest rate increases, especially alongside resilient wage growth. A fresh disappointment, however, could prompt doubts over the Canadian economy's capacity to weather persistent trade tensions and encourage greater caution among policymakers.

Will Canada's October jobs report keep the Unemployment Rate at 6.5%?

An October employment gain of around 13.6K is the consensus forecast among analysts, which would recover part of September's substantial 68.3K loss. Analysts also project an unchanged Unemployment Rate of 6.5%.

A somewhat firmer outcome is expected by RBC: 15K additional jobs and a slight easing in the Unemployment Rate to 6.4%. In the bank's view, US tariffs continue to affect mainly the sectors directly exposed to them. It also notes that more than 80% of Canada's exports to the US retain duty-free access under the United States-Mexico-Canada Agreement (USMCA).

To judge whether Canada's labour market is stabilising, investors will look beyond the headline numbers. Manufacturing jobs, full-time employment, wage growth and the participation rate will be key areas of scrutiny.

How could Canada's October Unemployment Rate release move USD/CAD, and when is it due?

The Canadian Dollar could draw support from an above-forecast employment reading, particularly if unemployment falls and wage growth strengthens, bolstering expectations of additional BoC monetary tightening. Statistics Canada's October employment report is due on Friday at 13:30 GMT.

A further employment disappointment, on the other hand, could weaken the Loonie as expectations for more interest rate increases recede. That risk would be particularly relevant if job losses spread beyond industries directly exposed to US trade restrictions.

With the US employment report arriving at the same time, USD/CAD could see heightened volatility. Investors will compare the strength of the two labour markets and weigh the resulting monetary policy implications.

Caution ahead of both countries' jobs reports is supporting a firmer US Dollar (USD), leaving USD/CAD trading with an upward bias around 1.4070 on Friday.

A test of horizontal pivot resistance at 1.4070 is under way on the one-hour USD/CAD chart. The near-term outlook retains a positive bias, with the pair above its 100-period and 200-period Simple Moving Averages (SMAs), which are grouped just below 1.4000. Meanwhile, the Relative Strength Index (14), near 82 and well into overbought territory, points to robust but increasingly stretched upward momentum as the pair advances.

If USD/CAD breaks decisively above 1.4070, attention would turn to the next resistance at 1.4115. The horizontal barrier there could limit further advances should buyers be unable to sustain the breakout. Any retreat would first encounter psychological support around 1.4000, ahead of the 200-period SMA near 1.3993. A deeper corrective pullback would bring the 100-period SMA around 1.3981 and horizontal support at 1.3930 into view as a further zone of demand.

(The technical analysis of this story was written with the help of an AI tool. Know more.)