Canada Unemployment Rate rose to 6.7% in October as economy unexpectedly shed jobs

Canada's Unemployment Rate rose to 6.7% in October, up from 6.5% in September and above market expectations of 6.5%, according to data released by Statistics Canada on Friday.

Meanwhile, the Net Change in Employment showed a decline of 4.7K jobs in October, missing expectations of a 13.6K increase. However, the reading represents an improvement from the substantial loss of 68.3K jobs recorded in September.

The Canadian economy has shed a total of 114.7K jobs since August, highlighting the persistent weakness of the labour market despite a slowdown in job losses in October.

The deterioration comes amid persistent uncertainty surrounding United States (US) tariffs, which continue to weigh on hiring prospects in trade-sensitive industries. The disappointing employment report also raises questions about the Bank of Canada's (BoC) monetary policy outlook. The central bank raised its benchmark interest rate on October 28, marking its first increase in more than three years, while leaving the door open to further tightening depending on incoming economic data.

Against this backdrop, the unexpected contraction in employment and the increase in the Unemployment Rate could encourage the BoC to adopt a more cautious approach to additional interest rate hikes, particularly as trade tensions continue to weigh on economic activity.

The Canadian Dollar remains under selling pressure following the release, with USD/CAD advancing to around 1.4100 at the time of writing, rising 0.63% on Friday. The Loonie comes under selling pressure following weaker-than-expected Canadian employment figures, while a much stronger-than-expected United States (US) jobs report, released simultaneously, provides additional support to the US Dollar (USD), amplifying the pair's upward momentum.

This section below was published as a preview of the Canada employment report at 09:30 GMT.

• Canada's Unemployment Rate is expected to remain unchanged at 6.5% in October.
• The Canadian economy is expected to add 13.6K jobs after losing 68.3K in September.
• The employment report could influence expectations for further Bank of Canada interest rate hikes.

Statistics Canada will release its October Labour Force Survey on Friday at 13:30 GMT, with markets anticipating a modest recovery in employment following September's sharp decline. The Unemployment Rate will also be closely watched, as the latest figures could influence the Canadian Dollar (CAD). The report comes as the Canadian labour market continues to face uncertainty surrounding United States (US) tariffs, which have weighed on hiring prospects in trade-sensitive industries. Investors will closely monitor whether employment conditions are stabilizing after the economy shed nearly 110K jobs over August and September. 

Royal Bank of Canada (RBC) notes that September's employment decline was largely concentrated in public-sector positions, particularly education and healthcare, rather than industries directly exposed to US tariffs. RBC also highlights early signs of improving hiring demand in October, suggesting that trade restrictions may have stalled the labour market's recovery without triggering a broader deterioration.

The employment figures take on particular importance after the Bank of Canada (BoC) raised its benchmark interest rate on October 28, marking its first increase in more than three years. Although the central bank has left the door open to additional monetary tightening, future decisions will depend on incoming economic growth and inflation data.

Against this backdrop, a stronger-than-expected employment report could reinforce expectations of further BoC interest rate hikes, particularly if accompanied by resilient wage growth. Conversely, another disappointing reading could raise concerns about the Canadian economy's ability to withstand ongoing trade tensions and encourage policymakers to adopt a more cautious approach.

What can we expect from Canada's Unemployment Rate and jobs report?

Consensus among analysts sees Canada's Unemployment Rate holding steady at 6.5% in October. Additionally, analysts expect the economy to add around 13.6K jobs, partially reversing the substantial 68.3K decline recorded in September.

RBC anticipates a slightly stronger increase of 15K jobs and a modest decline in the Unemployment Rate to 6.4%. The bank argues that the impact of US tariffs remains concentrated in directly affected sectors, while more than 80% of Canadian exports to the US continue to benefit from duty-free access under the United States-Mexico-Canada Agreement (USMCA).

Beyond the headline figures, market participants will pay particular attention to manufacturing employment, full-time positions, wage growth and the participation rate to assess whether the Canadian labour market is showing signs of stabilization.

When is Canada’s October Unemployment Rate released, and how could it affect USD/CAD?

Statistics Canada will publish its October employment report on Friday at 13:30 GMT. A stronger-than-expected reading could provide support to the Canadian Dollar, particularly if accompanied by a decline in unemployment and stronger wage growth, reinforcing expectations of further monetary tightening from the BoC.

Conversely, another disappointing employment report could weigh on the Loonie by reducing expectations of additional interest rate hikes, particularly if employment losses extend beyond sectors directly affected by US trade restrictions.

The simultaneous release of the US employment report could also amplify volatility in the USD/CAD pair, as investors assess the relative strength of the two labour markets and the implications for monetary policy.

USD/CAD trades with a positive bias around 1.4070 on Friday, supported by a firmer US Dollar (USD) amid cautious market sentiment ahead of the employment reports from both countries.

On the one-hour chart, USD/CAD holds a constructive near-term bias as price sits above the 100-period and 200-period Simple Moving Averages (SMAs) clustered just under 1.4000, while testing a horizontal pivot resistance at 1.4070. The Relative Strength Index (14) is deeply overbought near 82, hinting that upside momentum is strong but increasingly stretched as the pair presses higher.

On the topside, a clear breakout above 1.4070 would shift focus to the immediate resistance at 1.4115, where a horizontal barrier may cap further gains if buyers fail to extend the breakout. On the downside, the first layer of support is the psychological backing around 1.4000, followed by the 200-period SMA near 1.3993, with the 100-period SMA around 1.3981 and the 1.3930 horizontal level providing a deeper demand zone if a corrective pullback unfolds.

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