Markets are watching Canadian employment data closely. October is expected to show a small decline of 5,000 jobs. This follows a big increase of 60,000 jobs last month. If the numbers are worse than expected, it may raise hopes for another rate cut by the Bank of Canada. This could push the USD/CAD exchange rate to between 1.4150 and 1.4200, which may act as a medium-term resistance level. Weak trade data from China is also putting pressure on currencies like the Canadian dollar. Chinese exports dropped by 1.1% compared to last year, while imports only rose by 1%. These results are concerning for countries that rely on Chinese industrial demand. They hint that nations depending on exports might still be facing challenges due to US tariffs, indicating ongoing issues in global trade.

Focus on Canadian Jobs Data

Our attention is on Canada’s jobs data for October, which is forecasted to show a loss of 5,000 jobs. A larger decrease could strengthen expectations for another rate cut by the Bank of Canada. This could drive the USD/CAD exchange rate closer to the 1.4150-1.4200 range in the upcoming weeks. Given this situation, traders might think about buying USD/CAD call options with strike prices around 1.4200 for expiration in late December 2025. This strategy benefits from a potential sharp rise if Canadian economic data weakens. The 1.4200 mark could be a significant medium-term resistance level. The Canadian dollar is facing weakness partly due to disappointing trade numbers from China. Recent data shows that Chinese exports fell by 1.1% year-on-year in October, which is a troubling sign for global trade. This decline in Chinese activity affects the demand for commodities, a key part of the Canadian economy.

Domestic and Global Economic Challenges

This external pressure is worsened by domestic troubles, as Statistics Canada recently reported that core inflation fell to 2.1% in September 2025. This is the lowest level seen in nearly two years and aligns inflation closer to the Bank of Canada’s target. Consequently, the central bank has more options to lower interest rates to help a slowing economy without being overly concerned about rising prices. We can recall a similar trend from late 2022, when fears of a global recession caused commodity prices to drop. During that time, USD/CAD surged from 1.33 to over 1.38 in just a few months. The combination of sluggish global growth and soft domestic data now suggests that a similar scenario could be unfolding. Create your live VT Markets account and start trading now.

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