Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3680-1.3930
Euro 1.5960-1.6210
Sterling 1.8260-1.8510
WTI Oil (opening level) $53.43
The CAD/USD is opening at 1.3806 ( 0.7243 )
CAD fell drastically on Friday after the release of the Canadian labor market report for November, which showed that the Unemployment Rate dropped significantly to 6.5% from 6.9% in October due to a significant increase in part-time workers.
Full-time jobs created by the Canadian economy in November were 53.6K, slightly lower than 66.6K in October, while economists anticipated that employers would have shed 5K jobs.
Strong Canadian employment data has diminished hopes of an interest rate cut by the Bank of Canada for the monetary policy scheduled on Wednesday, and is expected to hold interest rates steady at 2.25%.
The uncertainty over trade relations between the USA and Canada still remains a major hang for CAD. Following the meeting PM Mark Carney and Mexican President Claudia Sheinbaum on Friday, US President Donald Trump stated that talks were "very good, very productive", but didn’t clarify on when Washington will resume trade talks with Canada.
Trump said, “We’ll see,” when asked if he would restart trade talks Canada
Meanwhile, the USD trades with caution ahead of the Fed monetary policy announcement on Wednesday. The Fed is widely anticipated to cut interest rates by 25 basis points (bps) to 3.50%-3.75% as labor market conditions continue to deteriorate.
Headlines
· Canada's unemployment rate fell to a 16-month low of 6.5% in November 2025, down from 6.9% and beating expectations of a rise to 7%. The unemployed population decreased by 80,000 to 1.5 million, while the labor force shrank by 26,000, lowering participation to 65.1%. Employment rose by 53,600 to 21.14 million, driven by a 63,000 increase in part-time jobs, with 18% working part-time involuntarily.
· China’s trade surplus for the month of November was USD 112 billion, bringing the January-November surplus to a record USD 1 trillion.
· US PCE price index rose 0.3% in September 2025, matching August and in line with expectations. Goods prices increased by 0.5%, while services slowed to 0.2%. Core PCE, excluding food and energy, rose 0.2%, consistent with forecasts. Annually, headline PCE inflation climbed to 2.8%, its highest since April 2024, while core PCE inflation decreased to 2.8%. September's report was delayed due to a government shutdown.
· University of Michigan Consumer Sentiment Index rose to 53.3 in December 2025 from 51 in November, beating expectations of 52 and marking the first rise in five months. Improved personal finance expectations, notably among younger consumers, drove the increase. Year-ahead inflation expectations dropped to 4.1%, the lowest since January, and five-year expectations fell to 3.2%.
· U.S. personal spending rose 0.3% in September 2025, increasing by $65.1 billion, meeting expectations after a revised 0.5% gain in August. A $63 billion jump in services led the growth, notably in housing, healthcare, and food services. Goods spending increased slightly by $2.1 billion, driven by a $17.2 billion surge in energy goods, which offset declines in vehicles, recreational goods, and apparel.
· China's foreign exchange reserves increased by $3 billion to $3.346 trillion in November 2025, the highest since 2015, amid a weaker US dollar. The yuan fell 0.65% against the dollar, while analysts expected reserves of $3.36 trillion. The People's Bank of China also boosted its gold holdings for the thirteenth month, with reserves rising to 74.12 million fine troy ounces, increasing gold's value to $310.65 billion.
Key Points
· Equities: Global equities ended the week higher as softer U.S. inflation supported Fed cut hopes while Europe and Asia posted uneven gains
· Volatility: SPX grind higher, VIX mid-teens, modest range, event-heavy week
· Digital Assets: BTC, ETH firmer; miners, ETFs softer; upside structures; tokenized income and bank adoption
· Fixed Income: Japan’s yields continue to rise to post-GFC highs. German Bunds set to rise to new highs since March.
· Currencies: USD soft, CAD ripped higher Friday on Canadian employment data
· Commodities: Crude oil edges higher, gold rangebound