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    Canadian Employment Insurance beneficiaries decreased to 0.1% in August from 1.2%

    by VT Markets
    /
    Oct 23, 2025
    Canada’s Employment Insurance beneficiaries changed in August, with a slight increase of 0.1% from the previous month. This is a drop from July’s rise of 1.2%. These numbers indicate that the growth rate of Employment Insurance recipients is slowing. Fewer claims are coming in compared to the month before.

    Reviewing The Canadian Labor Market

    In August, the number of people on Employment Insurance barely increased, which signals a big slowdown compared to July’s sharp rise. This suggests that the Canadian labor market is not weakening as fast as we had feared. We may need to rethink our assumptions about a quickly declining economy. This shift in the job market makes it less likely that the Bank of Canada will lower interest rates soon. We had anticipated a higher chance of a rate cut, but this new data gives the central bank a reason to hold off. Strategies betting on a rate cut before the year ends now carry greater risk. We should also consider the recent inflation report from Statistics Canada, which showed core CPI steady at 2.8% in September. Historically, the Bank of Canada has not cut rates when inflation remains stubbornly high and the job market is stable. This suggests that any policy easing could be pushed back to 2026.

    Impact On The Canadian Dollar And Equity Markets

    As a result, we expect the Canadian dollar to strengthen against the US dollar. Traders in options should consider strategies that benefit if the USD/CAD exchange rate does not break the 1.3750 resistance level it has tested recently. This report weakens the case for a much weaker loonie. For equity markets, this creates a more stable environment for the S&P/TSX 60 index. The reduced fear of a sharp economic downturn is positive for Canadian banks and consumer-focused companies. We might see implied volatility on TSX options decrease, which could make strategies involving selling puts more appealing in the weeks ahead. Create your live VT Markets account and start trading now.

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