The Canadian Dollar remains under pressure just below the 1.4000 mark as investors await the release of Canada’s September Labour Force Survey, due Friday at 12:30 GMT. Market consensus anticipates a modest 5,000 job gain and a slight uptick in the Unemployment Rate to 7.2%, up from 7.1% in August.
Cooling Labour Market Supports BoC Rate Cut Expectations
A soft labour market print could further strengthen expectations for additional Bank of Canada (BoC) rate cuts, following the 25 basis point reduction in September that brought the policy rate down to 2.50%.
At that meeting, BoC Governor Tiff Macklem maintained a cautious tone, emphasizing a data-dependent approach and acknowledging that inflation remains elevated, though somewhat more contained. He reiterated the BoC is “not even contemplating QE” and pushed back against recession fears, forecasting 1% growth in H2 2025.
Senior Deputy Governor Carolyn Rogers added that no change in the deposit rate is being considered at this time.
Labour Market Snapshot
- August Data:
- Employment Change: -65.5K
- Unemployment Rate: 7.1%
- Average Hourly Wages: +3.6% YoY (up from 3.5%)
- September Expectations:
- Employment Change: +5K
- Unemployment Rate: 7.2%
According to TD Securities, modest job growth in the services sector is likely to drive September’s employment numbers, while goods-producing sectors may show mixed results.
Market Reaction: USD/CAD in Focus
Markets are currently pricing in a 70% chance of another 25 bps rate cut at the BoC’s October 29 meeting, with nearly 25 bps of total easing priced in by year-end. A weaker jobs report would likely raise the odds of further easing, putting additional pressure on the Canadian Dollar (CAD).
FXStreet Senior Analyst Pablo Piovano notes that USD/CAD has been consolidating below the key 1.4000 level since late September, capped by resistance around the 200-day Simple Moving Average (SMA) at 1.3980.
Technical Outlook: USD/CAD Bias Remains Bullish
- Immediate Resistance:
- 1.3986 – October high (Oct 2)
- 1.4015 – May high (May 13)
- 1.4414 – April peak (Apr 1)
- Key Support Levels:
- 1.3822 – 55-day SMA
- 1.3761 – 100-day SMA
- 1.3726 – September low (Sept 17)
- 1.3556 – July low (July 3)
- Momentum Indicators:
- RSI: Above 62, signaling bullish momentum
- ADX: Near 24, indicating a strengthening trend
Piovano suggests that a clear break above 1.4015 could open the door for a push toward multi-month highs, while a drop below the key support zone could trigger a deeper correction.
