The Canadian dollar was strong, as the BoC could keep interest rates high amid the current situation of the Canadian labor market.

Canadian labor data showed a positive economic recovery, resulting in a bullish effect for the Loonie while market participants await Fed Chair Jerome Powell's speech tonight. USD/CAD plunged more than 0.4% to the 1.3500 range during the New York session on Friday (December 1).

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Statistics Canada reported that the economy created 24.9k jobs in November 2023. This performance surprised positively, as the consensus had expected the figure to decline to 15.0k from 17.5k in the previous period.

Other Canadian labor data was in line with market forecasts. The unemployment rate increased from 5.7% to 5.8% as the population grew faster than job creation.

Market participants pushed back the projected timing of the Bank of Canada's (BoC) first interest rate cut. The chance of a March 2024 cut is reduced from 74% to around 60% at the time of writing. Analysts believe that the BoC can keep interest rates high for a longer period given Canada's resilient labor market situation.

Michael Goshko of Convera Canada said that this data boosts positive sentiment towards the Loonie which has been boosted by US dollar weakness over the past few weeks.

Crédit Agricole last week also commented, "Employment data remains a key strength of the Canadian economy."

Crédit Agricole thinks the BoC will leave rates at 5.0% in next month's policy meeting. However, they will likely maintain a hawkish bias by not removing the prospect of further policy tightening.

One more factor supporting the Canadian dollar rate: is the stabilization of global crude oil prices. Over the past week, Brent crude oil prices circulated USD80 per barrel and WTI stayed above USD75 per barrel.