Foreign Exchange Commentary

Summary

• Canadian dollar continues recent strength, trades below C$1.3750.
• The U.S. dollar weakened after U.S. government reports sluggish jobs growth.
• U.S. November nonfarm payrolls rose 64,000 after loss of 105,000 in October.
• The 4.6% U.S. unemployment rate is the highest in more than four years, according to a delayed government report.
• U.S. October retail sales unchanged month over month, estimate: +0.1%.
• Japan’s yen gains from weaker levels.
• Treasury Secretary Hassett says Fed’s interest-rate moves need consensus.
• U.S. Treasury yield remains above 4% on the benchmark 10-year bond yield, currently at 4.18%.
• Mexico peso strong, below 18/dollar.
• British pound sterling rose after stronger-than-forecast U.K. PMI data.
• U.S. dollar likely to weaken in 2026, ANZ Research says.
• EUR/NOK rose to near 12.0, hits highest since April 21.
• Indian rupee falls to new record low of  91 per one U.S. dollar.
• TWD drops to lowest since April.

Noteworthy

• U.S. Gained Jobs in November; Unemployment Rate Rises
• Unemployment Rate Rose to Highest Level in More Than 4 Years

The U.S. unemployment rate rose to 4.6% in November, its highest in more than four years, fueling questions about the American economy’s underlying strength.

The unemployment rate in November rose from 4.4% in September, the last month the Labor Department reported for the unemployment rate.

A long-delayed government report on Tuesday showed that 64,000 jobs were gained in November, while 105,000 jobs were lost in October.

The department published two months of data instead of one, after pausing its data collections during the 43-day government shutdown. An unemployment rate for October wasn’t available because, during the shutdown, officials weren’t able to conduct the survey needed to calculate that number.

Economists had expected a gain of 45,000 to 50,000 jobs for November, and a 4.5% unemployment rate.  Economists and market observers had generally expected a decline, in part because of government layoffs from earlier this year finally kicking in.

Federal-government employment shrank by 6,000 jobs in November, adding to a massive loss of 162,000 federal jobs in October. Federal-government employment is down by 271,000 since January, the Labor Department said.

Tuesday’s report offers new clues about a job market that has cooled significantly in recent months. Rising inflation and tariff uncertainty have prevented companies from expanding their workforces. But the Trump administration’s policies targeting immigrants have also curbed the number of job seekers. That has meant that labor demand hasn’t had to grow as quickly to prevent rising unemployment.

Job numbers for September and August were worse than previously reported. Some 108,000 jobs were added in September, lower than the 119,000 gain previously reported; 26,000 jobs were lost in August, instead of the previously estimated 4,000 decline.

Job losses in June, August, and October mean the U.S. economy has shed jobs in three out of the past six months.

Overall, economists describe the current labor market as a low-fire, low-hire environment. Most companies aren’t laying off workers en masse. But they also aren’t willing to hire too many workers—in part because they believe that a lot of those tasks can be filled by artificial intelligence. Many companies that typically rush to hire temporary workers at this time of year are potentially delaying hiring.

The report was eagerly anticipated after economists for months had to rely mostly on backward-looking government indicators and alternate data from the private sector.

The new jobs numbers are part of a significant batch of data that was delayed but will be available for the Federal Reserve by its next meeting in late January. A cooling labor market was behind its decision to cut interest rates last Wednesday.

Still, Federal Reserve Chair Jerome Powell cautioned last week that officials would look at incoming data with a “somewhat skeptical eye” because data wasn’t collected in October and half of November.

Powell also said Wednesday that official statistics could be overestimating job creation by up to 60,000 jobs a month, meaning the U.S. could have lost 20,000 jobs a month since April. Powell’s concern involves estimates the Labor Department must make when it is trying to measure jobs added or destroyed from new businesses being created or shutting down.

In foreign exchange markets, the euro currency rose to a 12-week high against the U.S. dollar after U.S. jobs data Tuesday.  This boosted the prospect of further Federal Reserve interest-rate cuts, while the European Central Bank is expected to hold rates steady, cementing U.S. Federal Reserve (Fed) and European Central Bank (ECB) divergence as we head into 2026.