Canada unemployment expected to stay high, reinforcing signs of a cooling labor market

Statistics Canada will release its Labour Force Survey on Friday, and markets are bracing for quite a steady print. The Unemployment Rate is expected to remain at 6.9% in May, while the Net Change in Employment is forecast to increase by 10K, reversing April’s 17.7K drop.

Despite the report’s tone, the bar for the Bank of Canada (BoC) to change its policy direction should remain pretty high. Indeed, the central bank is expected to keep its policy unchanged at its June 10 gathering, following four consecutive ‘on hold’ decisions.

At its latest event, the BoC signalled an upbeat medium-term outlook for economic growth while revising inflation higher for the current year. In addition, Governor Tiff Macklem delivered a cautious message at his press conference, keeping the data-dependent stance well in place while allowing for higher rates if energy prices remain elevated.

So far, market participants expect around 34 basis points of tightening by the central bank by year-end.

What can we expect from the next Canadian jobs report?

Consensus among analysts sees Canada’s Unemployment Rate at 6.9% last month. Additionally, investors forecast the economy will add around 10K jobs in May, surpassing the 17.7K loss recorded in the prior month. It is worth recalling that Average Hourly Wages rose at an annualised 4.8% in April (from 4.7%), pointing to sticky wage inflation.

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

All eyes in Canada will be on Friday’s release of the jobs report, due at 12:30 GMT. A stronger print could give the Canadian Dollar (CAD) a quick lift, but don’t expect fireworks.

USD/CAD has been on a steady uptrend since the beginning of May, almost entirely to the tune of developments in the Middle East and dynamics around its North American peer.

Pablo Piovano, Senior Analyst at FXStreet, points out that USD/CAD has been edging higher over the last few weeks, hitting fresh two-month tops north of 1.3900 the figure on June 4. The surpass of the latter could prompt spot to embark on a potential trip toward the 2026 ceiling of 1.3966 recorded on March 31. So far, the constructive outlook is expected to remain intact while above the 200-day SMA around 1.3810.

On the other hand, he highlights minor support at the weekly floor of 1.3770 (May 29), seconded by the provisional 55-day and 100-day SMAs at 1.3761 and 1.3719, respectively. Down from here emerges the May bottom at 1.3549 (May 1), closely followed by the March base at 1.3525 (March 9), the February trough at 1.3504 (February 11) and the 2026 valley at 1.3481 (January 30).

“Momentum favours extra gains, with caution,” he adds, noting that the Relative Strength Index (RSI) is flirting with the overbought region past the 69 level, and the Average Directional Index (ADX) just over 25 suggests the underlying trend appears to be gathering traction.