Canada's economy continues to show steady growth.

The Canadian dollar remains stable at approximately 1.4 CAD to USD, influenced by the U.S. presidential election. President Donald Trump has confirmed plans to raise tariffs again, including a significant 25% increase on imports from Canada and Mexico and a 10% increase on Chinese goods. These tariff hikes directly affect investor confidence, as Canada's largest exports to the U.S. are oil, gas, and energy products, followed closely by automobiles.

Despite this, investors expect the Bank of Canada to continue lowering interest rates in the coming month. However, the likelihood of a 50bps rate cut has diminished due to higher-than-expected inflation figures. Core inflation, which the Bank of Canada uses as a key domestic inflation metric, rose to 2.6% in October from 2.4% in September, exceeding the central bank's target. This increase is supported by robust economic indicators, such as strong employment data and PMI figures.

The average weekly earnings of non-farm employees in Canada rose 5.2% year-over-year to CAD 1,280 in September, marking the highest growth since 2021, following a 4.9% increase in August. This increase was observed across most industries, with 11 out of 20 sectors reporting higher earnings. Education services, healthcare, and social assistance saw the largest gains, reflecting growing competition in education and a societal shift toward health-conscious living.

Canada's Business Confidence Index, a long-term indicator reflecting the 12-month outlook for business performance, rose to 59.7 in November from 55.8 in October, the highest level since 2022. This increase highlights improved confidence across various sectors, despite minimal changes in industries such as construction, personal services, and recreation. Long-term confidence remains positive, signaling overall economic recovery, with businesses benefiting from increased sales despite rising labor costs.

Retail sales in Canada grew by 0.7% month-over-month in October, marking four consecutive months of expansion. This growth was driven by strong sales in multiple industries, particularly food and beverage sales, which rose by 3%. Sales in health and personal care products also surged, fueled by the essential nature of healthcare and the aging population trend.

The yield on Canada’s 10-year government bond fell below 3.35%, down from a four-month high. This decline aligns with lower U.S. Treasury yields. Investor confidence was boosted by President Trump's nomination of hedge fund manager Scott Bassett as Treasury Secretary, suggesting greater economic stability and potentially favorable policy changes. Investors are also awaiting GDP figures due later this week, which are expected to reflect clearer growth. Meanwhile, domestic economic data show positive trends despite inflationary pressures, with the producer price index rising 1.2% month-over-month, reflecting higher input costs for production materials.