Canada lost 18,000 jobs in April, taking total job losses in 2026 to 112,000. The unemployment rate rose to 6.9%, matching the level from April last year.
Hours worked were broadly unchanged, while the labour force participation rate increased. The rise in unemployment was linked to weak hiring rather than an increase in layoffs.
Permanent layoffs continued to fall in April and were 10% below their peak in October 2025. Unemployment also increased as more people left roles to look for new jobs, and as new entrants found it hard to get work.
The report said domestic spending by consumers, businesses and governments is expected to support a gradual improvement in labour conditions later in the year. The article stated it was produced using an AI tool and reviewed by an editor.
With Canada losing another 18,000 jobs in April, continuing the weak trend we’ve seen all year, the pressure is mounting on the Bank of Canada. The unemployment rate climbing to 6.9% gives the central bank a strong reason to consider an interest rate cut. As of this morning, futures markets are now pricing in a greater than 75% chance of a rate cut by the Bank’s July meeting, up from around 60% last week.
This situation makes a bullish stance on the USD/CAD currency pair attractive in the coming weeks. We saw a similar pattern during the central bank’s easing cycle back in 2015, where a dovish Bank of Canada led to a pronounced weakening of the loonie. Traders should consider buying call options on USD/CAD to capitalize on a potentially lower Canadian dollar while managing risk.
The outlook for the S&P/TSX 60 index is less clear, which points toward volatility-based trades. The fact that the rising unemployment is due to weak hiring, not a spike in layoffs, suggests the economy is slowing rather than collapsing. Given this uncertainty, buying straddles on major Canadian index ETFs could be a prudent way to play an expected increase in market choppiness.
We anticipate that resilient consumer spending will eventually improve conditions later in the year, as expected. This longer-term view may favour rate-sensitive sectors like utilities and real estate investment trusts (REITs). Selling cash-secured puts on strong names in these sectors could be a way to generate income or enter positions at a more attractive price if the market sees a short-term dip.
