• Canada's Unemployment Rate is expected to rise to 6.5% in September from 6.4% in August.
• The labour market faces its first full test since new US tariffs took effect in August.
• The Canadian Dollar remains under pressure ahead of the jobs report and the Bank of Canada's October meeting.

Statistics Canada will release its September Labour Force Survey on Friday, with markets anticipating a modest recovery in employment following August's sharp decline. The report takes on particular importance as it will be the first to fully reflect the impact of new United States (US) tariffs that took effect on August 22. These additional trade barriers could weigh on hiring, particularly in export-oriented industries, raising concerns about the resilience of the Canadian labour market.

According to Royal Bank of Canada (RBC), the new tariffs could have stalled the labour market's recovery without necessarily reversing it. The bank expects employment to increase by a modest 5K in September, while forecasting the Unemployment Rate to remain unchanged at 6.4%. Similarly, Canadian Imperial Bank of Commerce (CIBC) anticipates a modest increase of 5K jobs, warning that trade tensions could continue to weigh on manufacturing employment. The bank expects the Unemployment Rate to rise to 6.5%, in line with market consensus.

The employment figures could also influence expectations surrounding the Bank of Canada (BoC), which has maintained its policy rate at 2.25% since October 2025. The central bank is expected to remain cautious at its October 28 meeting, balancing signs of economic weakness against persistent inflationary pressures.

Indeed, Canada's headline Consumer Price Index (CPI) steadied at 3% YoY in August, remaining well above the BoC’s 2% target amid elevated energy prices. Against this backdrop, a stronger-than-expected employment report could revive speculation about a potential BoC interest rate hike, while another disappointing reading could reinforce expectations of a prolonged monetary policy pause.

What can we expect from the next Canadian jobs report?

Consensus among analysts sees Canada's Unemployment Rate rising to 6.5% in September, from 6.4% in August. Additionally, investors expect the economy to add around 7K jobs, partially reversing the substantial 41.7K decline recorded in the previous month.

It is worth recalling that Average Hourly Wages increased by 2% YoY in August, slowing from 3% in July and 3.7% in June, suggesting that wage inflation is gradually losing momentum.

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

When is the Canadian unemployment rate released, and how could it affect USD/CAD?

Statistics Canada will publish its September employment report on Friday at 12:30 GMT. A stronger-than-expected reading could provide some support to the Canadian Dollar (CAD), particularly if accompanied by resilient wage growth and a decline in unemployment.

Conversely, another disappointing employment report could weigh on the Loonie by reducing expectations of monetary tightening from the BoC.

USD/CAD remains in a consolidative phase near 1.4200 ahead of the release, with the pair's next directional move potentially influenced by the strength of Friday's labour market figures.

In the four-hour chart, USD/CAD maintains a constructive bullish bias while holding above the 100-period Simple Moving Average (SMA) at 1.4151 and the 200-period SMA at 1.4003. The clustering of horizontal supports between 1.4175 and 1.4200 reinforces a rising structure, even as the Relative Strength Index (RSI) near 45 hints at easing momentum after the recent advance.

On the topside, immediate resistance appears at 1.4232, ahead of 1.4270 and the recent cap near 1.4293. On the downside, initial support is seen at 1.4200, followed by 1.4175, with the 100-period SMA around 1.4151 and nearby horizontal levels at 1.4150 and 1.4133 forming a broader demand zone; deeper pullbacks would expose 1.4100 and then 1.4025 before the longer-term 200-period SMA at 1.4003.

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

Economic Indicator

Unemployment Rate

The Unemployment Rate, released by Statistics Canada, is the number of unemployed workers divided by the total civilian labor force as a percentage. It is a leading indicator for the Canadian Economy. If the rate is up, it indicates a lack of expansion within the Canadian labor market and a weakening of the Canadian economy. Generally, a decrease of the figure is seen as bullish for the Canadian Dollar (CAD), while an increase is seen as bearish.

Canadian Dollar FAQs

The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.