Canada’s Unemployment Rate expected to stay at 6.5% as hiring picks up

• October is expected to leave Canada's unemployment rate steady at 6.5%.
• Following September's loss of 68.3K jobs, Canada's economy is forecast to add 13.6K positions.
• Expectations of further interest rate rises from the Bank of Canada could shift in response to the employment figures.

A modest rebound in October employment is anticipated after September's sharp fall, with Statistics Canada due to publish its Labour Force Survey on Friday at 13:30 GMT. Markets will also scrutinise the unemployment rate, as the figures could affect the Canadian Dollar (CAD). Uncertainty over United States (US) tariffs continues to cloud the Canadian labour market, weighing on recruitment prospects in trade-sensitive industries. Having seen the economy lose nearly 110K jobs across August and September, investors will be looking closely for evidence that employment conditions are stabilising. 

According to Royal Bank of Canada (RBC), public-sector roles, notably in education and healthcare, accounted for much of September's employment fall, rather than industries with direct exposure to US tariffs. The bank also points to tentative signs of stronger hiring demand in October. These suggest that trade restrictions may have interrupted the labour market's recovery without causing a more widespread deterioration.

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

In this context, employment figures that exceed forecasts could strengthen expectations of additional BoC interest rate rises, especially alongside resilient wage growth. A further weak report, by contrast, could prompt concerns over Canada's capacity to weather persistent trade tensions and lead policymakers towards a more cautious stance.

Canada's unemployment rate expected to hold steady as jobs recover modestly

An unchanged October unemployment rate of 6.5% is the consensus forecast among analysts for Canada. They also anticipate a gain of around 13.6K jobs, which would reverse part of September's sizeable 68.3K fall.

A slightly larger gain of 15K jobs is forecast by RBC, alongside a small drop in the unemployment rate to 6.4%. In the bank's view, US tariffs continue to affect directly exposed sectors most heavily. It notes that more than 80% of Canadian exports to the US still enjoy duty-free access under the United States-Mexico-Canada Agreement (USMCA).

To judge whether Canada's labour market is beginning to stabilise, investors will look beyond the headline numbers. Manufacturing employment, full-time jobs, wage growth and the participation rate will receive particular scrutiny.

USD/CAD faces Canada's October unemployment release on Friday

Friday at 13:30 GMT brings the release of Statistics Canada's October employment figures. Should the report beat expectations, the Canadian Dollar could find support, especially if unemployment falls and wage growth strengthens. Such a combination would bolster expectations of further monetary tightening by the BoC.

A further disappointing jobs report, however, could lower expectations of additional interest rate rises and put pressure on the Loonie. That risk would be particularly relevant if job losses spread beyond industries directly exposed to US trade restrictions.

With the US employment figures due at the same time, USD/CAD could also see greater volatility. Investors will weigh the comparative strength of the two labour markets and what it means for monetary policy.

A stronger US Dollar (USD) is underpinning a positive trading bias in USD/CAD around 1.4070 on Friday. Market sentiment remains cautious ahead of the employment releases from both countries.

Trading above the 100-period and 200-period Simple Moving Averages (SMAs), which converge just below 1.4000, USD/CAD retains a constructive short-term bias on the one-hour chart. The pair is testing horizontal pivot resistance at 1.4070. Meanwhile, the Relative Strength Index (14) sits deep in overbought territory near 82, suggesting that upward momentum remains strong but is becoming increasingly stretched as the pair advances.

A decisive break through 1.4070 would bring the immediate resistance at 1.4115 into view. This horizontal barrier could limit further advances if buyers cannot sustain the breakout. Should the pair retreat, initial support lies at the psychological 1.4000 level, ahead of the 200-period SMA near 1.3993. Further down, the 100-period SMA around 1.3981 and horizontal support at 1.3930 form a deeper demand zone in the event of a corrective pullback.

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