Canada's job growth shines but Canadian dollar shrugs

[Redator]

The Canadian dollar is almost unchanged on Monday. In the European session, USD/CAD is trading at 1.3684, down 0.04% on the day.

Canada's employment soars above expectations

Canada's job growth for June was much stronger than expected. Employment jumped by 83.1 thousand, after an 8.8 gain in May and blew past the consensus of no change. The gain was mostly in part-time work, which climbed by 69.5 thousand.

An additional positive surprise was the decline in the unemployment rate, which fell from 7% to 6.9%. This was below the consensus of 7.1%. The reading was significant as the unemployment rate had accelerated for three straight months. Wage growth eased to 3.2%, down from 3.5% in May. The drop eased concerns that rising wages would boost inflation.

The positive employment report has eased concerns that US tariffs would cause a further deterioration in the labor market. This could have significant implications for the Bank of Canada, which meets next on July 30. The recent slowdown in the labor market had raised expectations that the BoC would deliver a rate cut for the first time since March, but the strong June jobs report eases pressure on the Bank to lower rates.

BoC likely to hold in July

The money markets have priced in a July hold at 84% but the economic outlook remains fluid, especially with US President Trump's threat to hit Canada with 35% tariffs on August 1. Tuesday's inflation report could have a strong impact on the July decision. Inflation is expected to rise to 1.9% from 1.7% in May, which would be within the BoC's 2% target.

The BoC is expected to lower rates in the second half of the year, but it will be difficult for BoC policymakers to chart a rate path, given all the economic uncertainty.

USDCAD Technical

• USD/CAD has pushed below support at 1.3691, followed by support at 1.3651.
• There is resistance at 1.3730 and 1.3770

USDCAD 1-Day Chart, July 14, 2025

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