In March, Canada's economy added 14,000 jobs (+0.1% month?on?month), roughly in line with analysts' forecasts of a 15,000 rise — employment was essentially unchanged. Unemployment also held steady at 6.7%, as did the participation rate at 64.9%.

The data indicates that the elevated unemployment is driven mainly by weak hiring rather than layoffs, which indirectly points to a broader economic slowdown: employers are reluctant to expand amid high uncertainty. Strong hourly wage growth — up from 3.9% to 4.7% year?on?year — is feeding already elevated inflation expectations.

Overall, there appears to be little momentum on Canada's labor market. No momentum, no reaction; however, hours worked also increased, so there is no immediate threat of a GDP growth slowdown. Accordingly, the Bank of Canada can neglect for a while potential slowdown signals and remains focused on inflation, which is likely to continue rising. Therefore, the regulator may refrain from taking action until the picture becomes clearer. From the loonie's standpoint, the current situation supports a pause and offers no clear driver for either appreciation or depreciation.

In a snap parliamentary election in Canada, the ruling Liberal Party, led by Mark Carney, won a majority in the House of Commons. Because Carney previously led a minority government and was constrained in implementing economic policy, he can now pursue a more consistent policy, particularly in relations with the US — a positive factor for the Canadian dollar. The most succinct comment accompanying Carney's victory is simple: Trump lost.

All in all, the number of factors weighing on the CAD has decreased, especially if the peace process in the Middle East advances.

The net short position on CAD increased by $1.7 billion over the reporting week — the worst result among major currencies — reaching -$4.0 billion. The calculated price is moving decisively higher.

A week ago, we suggested that a decline to the 1.3730/50 support was unlikely and would only occur if a peace process in the Gulf began. The first round of talks was unsuccessful, but it appears both the US and Iran are interested in ending hostilities, which raises hopes for growing optimism. If that trend is confirmed, we expect further USD/CAD weakness, with support at 1.3590/3610 as a possible target. If peace efforts fail, an upside reversal toward the 1.3940/60 area becomes quite likely — although that scenario is currently less probable. Movement toward 1.4139 is not on the table for now.