ING Remains "Unexcited" on Canadian Dollar's Prospects Ahead of Friday's Labor Market Report

06:57 AM EST, 01/09/2026 (MT Newswires) -- Canada will release the Labour Force Survey for December at the same time the United States releases its jobs data at 8:30 a.m. ET on Friday, ING said.

The consensus for the LFS is a 2,000 drop for payrolls and an acceleration from 6.5% to 6.7% in the unemployment rate, noted the bank. These jobless levels are still well below the 7.1% September 2025 peak, although the Bank of Canada would start to worry if the country reapproaches the 7.0% mark.

In ING's view, market pricing for a rate hike in late 2026 looks premature. Inflation isn't showing worrying signs, the labor market may well loosen further, and the upcoming USMCA trade deal renegotiations could dampen consumer and business sentiment again.

The bank no longer expects another rate cut, but ING thinks the next rate hike will need to wait until at least 2027.

The Canadian dollar (CAD or loonie) has trailed other G10 currencies this week, with the prospect of a Venezuelan crude supply increase causing some concerns for Canadian oil exports, stated the bank. The WTI-WCS spread has widened to US$15/barrel in the past few days, the widest in a year.

Some soft jobs data on Friday may prevent CAD from recovering, and ING remains generally "unexcited" about the loonie's prospects in the coming months. A return to the 1.39-1.40 area in USD/CAD looks warranted in the current environment.

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