Statistics Canada will release its Labour Force Survey on Friday, and market participants expect a modest uptick in job creation in February, with the Employment Change foreseen at 10K following the -24.8K in the previous month. At the same time, the Unemployment Rate is forecast at 6.6%, following the 6.5% posted in January.
Employment data gains relevance ahead of the Canadian Consumer Price Index (CPI) data scheduled for next Monday, and the Bank of Canada (BoC) monetary policy announcement a couple of days later.
The BoC left its benchmark interest rate unchanged at 2.25% for a second consecutive time at its final meeting of 2025, with investors betting that Canadian policymakers would keep rates on hold throughout 2026. That, however, was prior to the Iran war.
The ongoing Middle East crisis has changed the monetary policy perspective for most central banks, including the BoC. After anticipating a modest hike by the end of 2026, market players shifted to betting on more aggressive tightening to keep inflation under control.
And while the Persian Gulf war is taking its toll mostly on energy prices and hence on inflation, employment levels also affect the BoC decision.
What can we expect from the next Canadian Unemployment Rate print?
Market players project a slight rise in Canada’s Unemployment Rate to 6.6% last month, up from 6.5% in January. Additionally, investors forecast the economy will add a few jobs in February, reversing the previous month’s slump. The Participation Rate was confirmed at 65% in January.
The employment report usually has a large impact on the Canadian Dollar (CAD), particularly if the outcome diverges from expectations. The impact tends to be larger when data is released ahead of the BoC decision.
That may not be the case this time, as the market focus remains on the Iran war. Skyrocketing Oil prices have lent unexpected support to the CAD during periods of risk aversion, with the commodity-linked currency refusing to yield to demand for the safe-haven US Dollar (USD).
Another consequence of the war is that market players are changing their central banks’ bets toward interest rate hikes amid mounting fears that higher energy prices will push inflation up. Inflation-related concerns are largely outweighing the labor market situation in shaping central banks’ decisions.
When is the Canada Unemployment Rate released, and how could it affect USD/CAD?
The Canadian monthly employment report is due on Friday at 12:30 GMT. Generally speaking, a stronger-than-anticipated outcome should provide support to the CAD, while dismal readings should weigh on the local currency. A reading that aligns with expectations usually goes unnoticed.
Ahead of the release, the USD/CAD pair trades below the 1.3600 mark, led by opposing forces: on the one hand, the USD is stronger across the FX board due to heightened demand for safety. On the other hand, the CAD benefits from stronger oil prices.
Valeria Bednarik, Chief Analyst at FXStreet, notes: “From a technical point of view, USD/CAD is bearish. The pair recently bottomed in 1.3525, and trades a handful of pips above the level. The daily chart shows it managed to post modest advances in the last couple of days, but selling interest is firm around 1.3600, as the pair has been unable to advance beyond it throughout the week. The same chart shows a flat 20 Simple Moving Average (SMA) hovers around 1.3640, the next resistance level should prompt sellers to give up at around 1.3600.”
Bednarik adds: “The downside seems limited by the 1.3520 area, with a clear break below it exposing the yearly low at 1.3481. An extension below the latter should open the door for a steeper decline, with market participants aiming to test the 1.3400 mark.”
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Economic Indicator
Net Change in Employment
The Net Change in Employment released by Statistics Canada is a measure of the change in the number of people in employment in Canada. Generally speaking, a rise in this indicator has positive implications for consumer spending and indicates economic growth. Therefore, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.
Next release: Fri Mar 13, 2026 12:30
Frequency: Monthly
Consensus: 10K
Previous: -24.8K
Source: Statistics Canada