empty
09.06.2025 03:05 PM
Strong Employment Report Supports the Canadian Dollar

Net employment change in May amounted to +8.8 thousand jobs, exceeding April's growth and presenting very strong data, especially against expectations — a loss of about 15 thousand jobs had been forecasted. This increase occurred despite an anticipated drop of 32.2 thousand jobs in public administration. Excluding this sector, the net employment growth in May was 41 thousand, which is significant for a country with a relatively small population.

It's also worth noting that all the job growth came from full-time employment (+57.7 thousand), while part-time employment fell by 48.8 thousand. Most of the increase was concentrated in the services sector, and wages surged sharply, with a month-over-month growth of 6.9%, the strongest figure since October.

This image is no longer relevant

The Bank of Canada held its latest monetary policy meeting two days before the employment report was published, keeping the interest rate unchanged at 2.75%, as expected. The central bank's tone was cautious and restrained, which is not surprising amid global uncertainty. In his opening remarks, BoC Governor Tiff Macklem stated: "The Governing Council considered that further rate cuts might be necessary if the economy weakens and price pressures subside," but he also clarified: "I would not interpret this as forward guidance; it was merely part of our discussions."

Considering the latest macroeconomic reports, it is safe to say that the likelihood of a rate cut in July has decreased rather than increased. The core inflation index rose in April, and the probability of inflation slowing in May is low, as there is significant revival in the services sector alongside strong wage growth.

For now, it seems that the Canadian economy is showing fewer signs of needing financial easing, giving the Bank of Canada reason to maintain a pause — especially if inflation shows renewed growth. This conclusion suggests that the Canadian dollar holds strong positions for further strengthening.

The reduction in short positions on CAD against the U.S. dollar has reversed, but USD/CAD is not reacting to the change in positioning — the U.S. dollar remains under pressure. The estimated price has turned south again.

This image is no longer relevant

Technical Outlook

In the previous analysis, it was noted that a break below the support zone of 1.3690/3710 could signal growing bearish sentiment, threatening the long-term bullish trend that has been in place since 2021. The loonie (CAD) has now fallen below this zone and is trying to consolidate beneath it. The absence of a corrective rally could strengthen the bearish momentum, with the next major target now at the 1.3410/30 support level. Fundamentally, Canada currently appears stronger, with stable core economic indicators — a contrast to the situation in the United States.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Evgeny Klimov
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

XAU/USD. Analysis and Forecast. Gold is supported by moderate USD weakness and trade-related uncertainty

Today, gold is trading higher, remaining within a sideways trend. Late Thursday, Federal Reserve official Christopher Waller stated that rising risks to the economy could justify a key rate

Irina Yanina 19:15 2025-07-18 UTC+2

AUD/USD. Analysis and Forecast

Today, the AUD/USD pair climbed above the key psychological level of 0.6500, attempting to confirm its recent positive momentum. The main driver behind the Aussie's rise is the weakening

Irina Yanina 13:49 2025-07-18 UTC+2

USD/CAD. Analysis and Forecast

Today, Friday, the USD/CAD pair is pulling back from a three-week high near 1.3775 recorded yesterday. At the moment, prices are trading slightly below the 1.3730 level, showing a modest

Irina Yanina 13:38 2025-07-18 UTC+2

The European Central Bank May Postpone Its Rate Cut Until December

While the euro attempts to stage a correction against the U.S. dollar, a survey of economists suggests that the European Central Bank may delay its final interest rate cut until

Jakub Novak 11:37 2025-07-18 UTC+2

Powell Responds to White House Criticism

Lately, Federal Reserve Chair Jerome Powell has faced increasing pressure, coming under fire from lawmakers, the White House, and U.S. President Donald Trump. In a letter sent on Thursday, Powell

Jakub Novak 11:26 2025-07-18 UTC+2

The U.S. Begins Regulating the Digital Currency Market (Potential for a Correction in Bitcoin and EUR/USD)

The U.S. House of Representatives has passed bills establishing the first federal framework for dollar-backed stablecoins and setting regulations for other digital currencies. The idea of regulating the cryptocurrency market

Pati Gani 09:28 2025-07-18 UTC+2

The Market Favors a Weak Dollar

What could be better for the S&P 500 than a Federal Reserve rate cut amid a still-strong economy? A series of positive labor market and retail sales data, combined with

Marek Petkovich 09:28 2025-07-18 UTC+2

What to Pay Attention to on July 18? A Breakdown of Fundamental Events for Beginners

Several macroeconomic reports are scheduled for release on Friday, but none of them are of major importance. The only noteworthy release is the University of Michigan Consumer Sentiment Index

Paolo Greco 06:13 2025-07-18 UTC+2

GBP/USD Overview – July 18: Is the Market Tired of the Dollar and Trump?

The GBP/USD currency pair once again leaned toward decline on Thursday. After the British pound strengthened on Wednesday evening following another report about Powell's dismissal, the dollar quickly recovered. However

Paolo Greco 03:56 2025-07-18 UTC+2

EUR/USD Overview – July 18: Trump Will Keep Trying to Fire Powell for Another Year

The EUR/USD currency pair continued its steady decline throughout Thursday. As a reminder, the forex market experienced an "explosion" on Wednesday evening. Donald Trump once again attempted to either fire

Paolo Greco 03:56 2025-07-18 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.