USD/CAD retreats as strong Canada jobs data lift the Loonie

• USD/CAD slips as the Loonie gains ground after stronger-than-expected Canadian jobs data.
• Canada added 66.6K jobs in October, sharply exceeding forecasts, as the Unemployment Rate edged down to 6.9%.
• US consumer sentiment slips to 50.3, while 1-year inflation expectations rise to 4.7% and 5-year ease to 3.6%.

The Canadian Dollar (CAD) strengthens against the US Dollar (USD) on Friday, snapping a six-day losing streak after stronger-than-expected labor market data signaled resilience in Canada's economy. At the time of writing, USD/CAD is trading around 1.4064, down nearly 0.35% on the day.

According to Statistics Canada, the economy added 66.6K jobs in October, sharply beating expectations for a 2.5K decline and following a 60.4K gain in September. The Unemployment Rate fell to 6.9% from 7.1%, while the Participation Rate edged higher to 65.3% from 65.2%.

Average hourly wages rose 4.0% YoY, up from 3.6% in September, signaling still-firm wage growth even as total hours worked slipped modestly due to strike-related disruptions. The broad-based increase in employment, led by services and private-sector hiring, suggests the economy remains more resilient than expected heading into year-end.

The strong employment report supports the case for the Bank of Canada (BoC) to keep policy steady following its recent rate cut. On October 29, the central bank lowered its benchmark rate by 25 basis points to 2.25%, as expected, and said the current rate is "about the right level if inflation and activity evolve as projected."

The BoC's message was widely seen as signaling that the easing cycle is likely nearing its end. Markets now expect policymakers to hold rates unchanged in December, with attention shifting to upcoming inflation data for confirmation.

In the United States (US), preliminary data from the University of Michigan's (UoM) November survey showed a sharper decline in consumer sentiment, reflecting growing concerns over inflation and the economic outlook. The headline Consumer Sentiment Index fell to 50.3 from 53.6, well below expectations of 53.2, while the Expectations Index slipped to 49.0 from 50.3.

Inflation expectations showed mixed movement, with the 1-year outlook rising to 4.7% from 4.6%, while the 5-year measure eased to 3.6% from 3.9%

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, fell to a one-week low near 99.42, extending its decline for the third consecutive day after briefly touching a five-month high of 100.36 on Wednesday. The weaker Dollar tone added to USD/CAD's downside momentum following the strong Canadian data.