USD/CAD edged up on Friday after weaker Canadian jobs data put pressure on the Canadian Dollar. The pair traded near 1.3694 after briefly testing 1.3700, its highest level since 29 April.
Statistics Canada reported Employment fell by 17.7K in April, versus expectations for a 15K rise, after a 14.1K gain in March. The Unemployment Rate rose to 6.9% from 6.7%, while Average Hourly Wages slowed to 4.8% year on year from 5.1%.
Canadian Data And Bank Policy Implications
The data may affect expectations for Bank of Canada policy, especially if oil-related inflation picks up. USD/CAD is also set to end a four-week losing run, as a pullback in oil prices weighs on the commodity-linked Canadian Dollar.
The US Dollar stayed under pressure after mixed US labour data, with the DXY near 97.92, down about 0.37% on the day. US Nonfarm Payrolls rose by 115K in April versus 62K expected, but slowed from 185K in March (revised from 178K).
The US Unemployment Rate held at 4.3%, while Average Hourly Earnings rose 0.2% month on month versus 0.3% expected. Annual wage growth rose to 3.6% from 3.4%, below the 3.8% forecast.
Attention also remained on the US-Iran conflict, with reports of clashes near the Strait of Hormuz raising questions over the ceasefire. The United States said it expected a response from Tehran on a peace proposal later on Friday.
Comparing Last Year And Today
We remember how a weak Canadian jobs report in May of last year sent USD/CAD briefly to the 1.3700 level. That surprise drop in employment in 2025 gave us a clear signal of a slowing Canadian economy. It was a classic case of bad domestic data weakening a currency.
The situation today is quite different, creating a more complex trading environment. Canada’s latest jobs report for April 2026 showed a massive gain of 90,400 positions, blowing past all expectations and holding the unemployment rate at 6.1%. This strength stands in stark contrast to the job losses we saw this time last year.
Despite the strong jobs data, the Bank of Canada is still widely expected to cut interest rates in June or July, while the US Federal Reserve signals it will hold rates higher for longer. This policy divergence is the dominant force and suggests underlying strength for the US dollar against the Canadian dollar. This expectation is keeping USD/CAD elevated near the same 1.36-1.37 range we saw in 2025.
Oil prices, which were a headwind for the loonie last year, have stabilized, with WTI crude currently trading around $79 per barrel. This provides some support for the Canadian dollar but is not enough to counteract the powerful effect of central bank policy differences. The market is weighing strong Canadian economic data against a more dovish Bank of Canada.
Given this tension, we should consider buying call options on USD/CAD for the coming weeks. This strategy allows us to profit if the pair breaks higher due to the Fed-BoC policy gap, while limiting our risk if strong Canadian data or rising oil prices unexpectedly strengthen the loonie. A sustained move above the 1.3700 resistance level that was tested last year would be a strong bullish signal.
We should be looking at strikes around 1.3750 or 1.3800 expiring in late June to position for a potential breakout. The US Nonfarm Payrolls report from last week showed a slowdown to 175,000 jobs, but wage inflation in the US remains a concern for the Fed. This reinforces the idea that the US will maintain higher rates longer than Canada will.
