Canadian Dollar: Spectacular Jobs Print, but Concerning Undercurrents
- Written by: Gary Howes
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The Canadian dollar jumps on a bumper jobs report.
The Bank of Canada will leave interest rates unchanged next week following a strong domestic jobs report showing 53.6K jobs were added in November, exceeding estimates for a negative 2.5K.
The unemployment rate collapsed from 7.0% to 6.5%.
"The latest Canadian employment data for November 2025 delivered a stunning headline beat," says Kevin Ford, an analyst at Convera.
The Canadian dollar rose in response to the impressive beat, with the GBP/CAD dropping to 1.8533 from an earlier intraday high of 1.8630.
However, we suspect Canadian dollar upside will almost certainly be crimped by the details of the report: part-time positions surged 63K, while the full-time component read -9.4K.
"The underlying composition reveals a concerning trend for the second consecutive month," says Ford.
Last Friday we saw similar dynamics of euphoric economic headlines soon being countered by sober details:
Canadian GDP blew apart expectations at 2.6% y/y on an annualised basis, but weak undercurrents were revealed as domestic private activity remained quite weak, business investment was flat, consumer spending declined, and imports fell.
The labour and GDP reports actually tie up quite nicely: businesses that are lacking confidence are more likely to take on part-time workers.
Above: The initial post-jobs report response was a drop in GBP/CAD. Downside will be limited by the complicating aspects of the report's components.
Andrew Grantham, economist at CIBC, one of Canada's biggest banks, says he doubts that the labour market is quite as strong as today's headline data suggests.
He cites somewhat concentrated job gains and a decline in participation that flattered the unemployment rate.
Yet, "today's release is still supportive of our assumption that the Bank of Canada's rate cutting cycle has ended," he says.
This is probably all the Canadian dollar requires to end the week on the high, but our concern is that data in the coming months expose some of Canada's soft economic underbelly.
