Published: 8 December 2025,03:59
Daily Market Analysis New
*November jobs beat expectations (+54,000), unemployment fell to 6.5%, highlighting resilience despite earlier tariff-related headwinds. Gains mainly in part-time roles and youth employment; health-care sector led growth.
*BoC Rate-Cut Reassessment: Markets are pricing in a pause rather than further cuts, with Canadian 2-year yields rising on stronger employment data.
*Services PMI at 44.3 signals contraction in service-sector activity, slower new business formation, and muted hiring intentions, suggesting broader economic momentum may be weakening despite strong headline jobs.
The Canadian Dollar (CAD) strengthened on Friday as investors digested stronger-than-expected labour market data for November and weighed implications for the Bank of Canada’s (BoC) monetary stance. Statistics Canada reported a surprising gain of 54,000 jobs last month, with the unemployment rate falling to 6.5% from 6.9% in October. Employment growth was concentrated in part-time positions and among youth aged 15–24, while the health-care and social assistance sector added 46,000 jobs, partially offset by losses in wholesale and retail trade. The three-month cumulative gain of 181,000 jobs underscores a resilient labour market, despite headwinds earlier in the year stemming from U.S. tariff uncertainty.
The robust jobs report has prompted markets to re-assess the probability of further BoC rate cuts. Traders are increasingly pricing in a pause, as solid employment growth contrasts with earlier softness in domestic demand indicators. Canadian government bond yields, particularly at the two-year tenor, climbed following the release, reflecting renewed expectations for more stable policy.
However, underlying economic signals present a mixed picture. November’s S&P Global Canada Services PMI dropped to 44.3, signaling contraction in service-sector activity, slower new business formation, and muted employment intentions among firms. This divergence between a strong headline labour number and weakening activity metrics suggests that while the labour market is holding up, broader economic momentum may be faltering.
On the FX front, the CAD’s recent appreciation against the U.S. dollar reflects both domestic strength and a broader risk-on tone in global markets. The rise in the loonie has implications for commodity-linked flows, given Canada’s status as a major energy exporter. Nevertheless, CAD gains could be capped if domestic activity continues to underperform relative to labour-market headlines, or if global risk sentiment shifts abruptly.
The USD/CAD pair has accelerated its decline on the chart, breaking decisively below the key support zone at 1.3910 and extending losses toward the next major demand level around 1.3830. This breakdown confirms a shift in momentum after weeks of choppy consolidation, with sellers firmly in control as the pair snaps the broader ascending trendline that previously supported the advance. The sharp downside follow-through reflects increasing bearish pressure, and the latest candle shows minimal rejection, suggesting that the move is driven by strong momentum rather than a simple liquidity sweep.
Momentum indicators reinforce this bearish bias: the RSI has plunged into oversold territory near 21, signaling strong downside pressure but also leaving room for a potential short-term corrective bounce. The MACD lines have crossed below the signal line and continue to widen, with the histogram printing increasingly negative bars, further confirmation of sustained bearish momentum. If price holds below 1.3830, the next downside target lies near 1.3730, while any rebound toward 1.3910 is likely to face heavy resistance unless bulls can reclaim that level with conviction.
Resistance level: 1.3910, 1.3985
Support level: 1.3830, 1.3730
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