CAD: Strong jobs data boosts Loonie
According to Statistics Canada, the Canadian labour market showed significant and unexpected strength in its latest Labour Force Survey for October 2025. Employment surged by 67,000, marking the second consecutive monthly gain and blowing past market expectations. This robust hiring pushed the national unemployment rate down by 0.2 percentage points to 6.9%. In a sign of underlying inflationary pressure, average hourly wages also continued to climb, accelerating to a 3.5% year-over-year increase. A significant caveat to the strong headline number was its composition: the gains were entirely in part-time roles, while full-time employment dropped by 18,500.
The details of the report show the gains were concentrated in the private sector, which added 73,000 jobs. Growth was led by core-aged men and youth, and was primarily driven by an increase in part-time work. On an industry basis, the services-producing sector saw large increases, particularly in wholesale and retail trade, as well as transportation and warehousing. Geographically, the strength was heavily concentrated in Ontario, which saw employment jump by 55,000, its first increase since June.
The market reaction to the jobs report was immediate. The Canadian dollar strengthened against the greenback, causing the pair to drop from 1.4100 to 1.4060 in the moments after the release. This ‘hawkish’ data, showing high employment and accelerating wage growth, has led traders to believe the Bank of Canada will have no reason to ease its monetary policy. As a result, markets are no longer pricing in any possibility of a rate cut within the next year.
GBP: BoE holds, December cut looms
The Bank of England held its base rate at 4% in a close 5–4 vote, with four members favouring a cut. This marks a shift from the prior 7–2 split and underscores growing appetite for easing amid softer inflation and a weakening labour market. Sterling pared gains and gilt yields fell on the decision. Governor Bailey struck a cautiously dovish tone, noting that inflation eased to 3.8% in September, likely marking the peak, while services inflation tied to wages is expected to normalise further. He made clear, however, that more data is needed to validate further easing and that September’s lower‑than‑expected print alone is not sufficient. He also highlighted that activity remains below potential and the labour market continues to soften, though additional evidence is still required to confirm the disinflation trend.
With fiscal tightening expected from the November budget, adding pressure on growth and inflation, and given the narrow vote split, the setup points to a December cut as increasingly likely. That said, for now investors appear reluctant to fully price deeper easing until next week’s heavy UK data releases provide further validation – with a 70% chance of a cut now priced in, up from 64–65% before the meeting.
Onto price action, sterling gained across the G10 board – but we don’t see this as meaningful. The rebound likely reflected investors unwinding defensive positions after no surprise cut, giving GBP some breathing room. Yet Bailey’s ‘we need to see data’ tone keeps the dovish bias intact and, combined with the heavy UK releases due next week, suggests the rebound may simply offer sellers better entry levels as more downside is expected.
EUR: Best day in over a month for euro
The euro posted its strongest daily gain against the dollar since late September, though the move was limited to just 0.5%—underscoring how tough it’s been for the common currency to build upside momentum. Buyers have defended the $1.14 level, eyeing a potential extension toward the 21-day moving average near $1.16, which has recently flattened. A rebound in the relative strength index from near-oversold territory adds technical support to the recovery attempt.
On the macron front, Eurozone PMIs surprised to the upside earlier in the week, with France’s industrial and manufacturing sectors outperforming expectations despite ongoing political uncertainty. In contrast, weaker-than-expected German industrial output and soft eurozone retail sales painted a more uneven macro picture, which is why EUR price action was largely subdued.
As it stands, the euro remains tethered to US developments. With investors parsing alternative indicators to gauge the health of the US economy – and sentiment buoyed by factors like trade negotiations – USD strength has persisted so far into the new month. As a result, EUR/USD is still trading below levels implied by macro fundamentals and policy outlook, which we estimate to be around $1.17.
This undervaluation helped fuel the sharper rebound yesterday, triggered by news of substantial private-sector layoffs in October. Still, as the euro edges closer to its fair value, further upside will likely require a steady stream of softer US data – especially given the Fed’s apparent reluctance to ease without more compelling evidence ahead of December’s policy announcement.
MXN: Banxico cuts 25 bps as expected
Yesterday, Banco de México (Banxico) cut its benchmark interest rate by 25 basis points to 7.25%, reinforcing its gradual easing cycle amid subdued economic activity. The move, widely expected by markets, was accompanied by a more optimistic inflation outlook. Core inflation for Q4 2025 was revised down to 4.1% from 4.2%, while general inflation was lowered to 3.5% from 3.6%. These adjustments suggest that underlying price pressures are easing, supporting the bank’s view that disinflation is progressing steadily, though the 3% inflation target remains set for Q3 2026.
Looking ahead, Banxico signaled openness to further rate cuts, contingent on continued inflation improvement. The Governing Board stated it will assess additional reductions in upcoming meetings, while maintaining a cautious stance. The bank emphasized that policy will remain aligned with its inflation convergence path and flagged external risks, such as exchange rate volatility and global trade developments, as potential disruptors. Overall, the improved inflation outlook provides room for continued easing, but Banxico remains vigilant.
The peso, after consolidating around 18.4 for much of October, it weakened into October-end, breaking above its 50-day Simple Moving Average and testing key resistance at 18.7. As market sentiment returns to calm, the Peso inches closer to 18.5. A sustained move higher in USD/MXN hinges on continued Dollar strength and worsening global market sentiment. For the short-term, the USD/MXN is expected to continue trading around 18.5-18.7, holding year-to-date gains at 12%.
Dollar eases after weeklong rally
Table: Currency trends, trading ranges and technical indicators
Key global risk events
Calendar: November 3-7
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
