Canadian Dollar Gains on Strong Jobs Data

The Canadian dollar rebounded to 1.41 per USD from the 15-month low of 1.425 on June 28th after stronger-than-expected employment data. Canada added 18,200 jobs in June following an 88,000 increase in May, while the unemployment rate unexpectedly fell and tied its lowest level in nearly two years, reducing the risk that the Bank of Canada would cut rates to attend a weaker economy. Meanwhile, oil prices retreated on signs that diplomatic efforts between the US and Iran remain on track despite recent tensions, easing some energy-driven inflation concerns.  At the same time, the US dollar remained firm amid the possibility of a Federal Reserve rate hike later this year.

The Canadian dollar sank to a one-year low of 1.42 per USD in late June tracking other G10 currencies as the outlook of a hawkish Fed supported the US dollar. Multiple FOMC members projected more than one rate hike this year as US inflation picks up. Meanwhile, core inflation rates tracked by the Bank of Canada remained near their 2% target in May despite the surge in energy prices during the period, aligning with the central bank's earlier signal that the war in Iran may only have transitionary effects on headline price growth. The Bank of Canada kept its key interest rate unchanged at 2.25% at its latest meeting, and signaled that it sees risks on both sides of its inflation and employment mandate amid the uncertain economic backdrop.

The Canadian Dollar touched 1.41 against the USD, the lowest since April 2025. Over the past 4 weeks, US Dollar Canadian Dollar gained 2.88%, and in the last 12 months, it increased 3.22%.