Canadian Dollar Rebounds After Labor Data

2026-02-06 14:30 By Felipe Alarcon 1 min. read

The Canadian dollar strengthened toward 1.365 per US dollar, trimming losses accumulated since late January after briefly touching 16 month highs, as labour data reduced the downside risk to Canada’s growth and policy outlook, narrowing expectations for aggressive Bank of Canada easing.

January labour data showed the unemployment rate falling to 6.5%, the lowest since September 2024, driven by a sharp drop in job searchers and continued resilience in full time employment, up 0.9% year-on-year.

Wage growth remained firm at 3.3%, reinforcing evidence that underlying labour cost pressures have not eased and limiting the scope for rapid rate cuts.

This backdrop has supported Canadian yields relative to recent expectations and helped reprice the BoC toward a slower and more cautious easing path, underpinning the currency.

The loonie has also drawn support from a pause in US dollar strength following softer US labour indicators.



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