Canadian Dollar twists after better-than-expected December jobs figures

• The Canadian Dollar rose on Friday, but still lost ground to the Greenback.
• Canada and the US both added more jobs than expected in December.
• The Canadian Unemployment Rate and wage growth also eased.

The Canadian Dollar (CAD) caught a bid on Friday, getting bolstered across the broader FX market after Canadian jobs figures in December surged well above forecasts. However, a wide surge of risk aversion after US Nonfarm Payrolls (NFP) figures also outperformed forecasts kicked the legs out from under investor rate cut expectations in 2025, sending the safe haven US Dollar broadly higher.

Canadian Net Change in Employment came in at 90.9K, a two-year high for monthly job gains, while US NFP net job additions surged to 256K, also beating the street. Firm job growth in the US will make it difficult for the Fed to deliver more rate cuts, and market bets on Fed rate cuts in 2025 are tumbling.

Daily digest market movers: CAD rises on jobs gains, but Greenback rises faster

• Canada added almost a hundred thousand jobs in December, surging to a two-year single-month hiring splurge. Median market forecasts expected a sharp drop to 25K for the month, below November's print of 50.5K.
• On the US side, NFP net job gains rose to 256K, well above the forecast 160K, 212K previous.
• Overall, retroactive revisions to datasets remain a key issue: employment survey participation remains low overall, with a respondent rate typically around 50%, leaving lots of room for holes in the reported figures.
• Canadian Average Hourly Wages grew at an annualized rate of 3.7% in December, down slightly from the previous period's 3.9%.
• The Canadian Unemployment Rate also ticked down to 6.7% from 6.8%; the street expected a move higher to 6.9%.

Canadian Dollar price forecast

Despite a firm print in Canadian job figures, markets are still pivoting into the safety of the Greenback, pushing the Loonie back down. The USD/CAD chart is once again bumping against the ceiling as the US Dollar rises to test multi-year highs against the Canadian Dollar.

USD/CAD is back over the 1.4400 handle, a key barrier for Loonie bulls. It's a short trip to new multi-year highs near the 1.4500 level, a price the pair hasn't seen since the pandemic era. Despite a plunge early this week, USD/CAD has pared away nearly all of its losses and is testing back into Monday's opening bids, leaving room for the CAD to fall further and push the pair into fresh highs.

USD/CAD daily chart