Canada added 37.3K jobs in January in comparison with 15K anticipated. The unemployment price fell to five.7% from 5.9% as labor pressure participation additionally slipped.

“Though labour market
circumstances stay looser than they have been a 12 months in the past, at this time’s information definitely received’t velocity up the trail to a primary curiosity
price reduce from the Financial institution of Canada,” CIBC wrote after the report.

One caveat to the report was that it was tiled to part time jobs at +49K rather than full time at -12K with much of the jobs growth from government jobs. That’s part of an ongoing trend:

“The variety of personal sector staff
rose by solely 7K, and has elevated by just one.6% on a year-over-year foundation. That’s in distinction to a 4.2% rise in public
sector payrolls,” CIBC wrote.

Another notable quirk is that population growth in the month was +125K, which has dragged the employment to population rate to the lowest since Jan 2022.

Some of these shifts explain why the loonie wasn’t able to hold onto its initial gains on Friday.

CIBC maintained its call for the first rate cut to come in June but now sees the BOC ending the year at 3.75% compared to 3.50% previously. The current overnight rate is 5.00% and the first cut is 76% priced in for Jun with the market priced at 4.25% at year end.

“The unemployment price is not rising as rapidly as beforehand anticipated given the widely
sluggish pattern in GDP, though a stabilisation or rebound in participation, mixed with solely modest employment
progress, might nonetheless take the jobless price above 6% by mid-year. That stated, at this time’s information verify that the Financial institution will not be in a
rush to chop rates of interest, and we preserve our expectation for a primary transfer in June. Given indications from at this time’s information
and beforehand launched GDP figures that the Canadian financial system is in considerably higher form than beforehand anticipated”

USDCAD weekly