Following the unexpectedly strong Canadian labour market report for September, Bank of Canada Governor Tiff Macklem still referred to it as an outlier. This is ultimately not entirely incomprehensible, given that the previous figures were significantly weaker, enabling policymakers to cut interest rates again in October despite higher inflation, Commerzbank's FX analyst Michael Pfister notes.

Stronger labour gains undermine case for October rate cut

"However, with the October labour market figures published on Friday, the story of an upward outlier began to show cracks: job growth was even stronger than in the previous month and significantly exceeded expectations of a slight decline in employment. The unemployment rate thus fell back below 7%, despite a slightly higher participation rate. Wages also rose much more strongly than expected. In retrospect, there were many arguments in favour of waiting until December with another cut."

"Of course, two months of better data are not enough to suggest a real trend reversal. The labour market figures have been far too volatile since February, when the US president set his sights on Canada. It is possible that the coming months will show job losses that offset the successes of the last two months. We have already seen this happen this year. For now, however, market participants sticking with the CAD can breathe a sigh of relief - and there haven't been many CAD success stories this year."