08:58 AM EST, 12/10/2024 (MT Newswires) -- One under-reported aspect of the latest North American jobs data was that Canada's unemployment rate is now a "hefty" 2.6 percentage points above the United States rate at 6.8% versus 4.2%, noted Bank of Montreal (BMO).

Aside from a couple of episodes during the wildness of the pandemic years, that's the widest gap on the downside for Canada since 2001, said the bank.

This gap serves as a leading indicator for the Canadian dollar (CAD or loonie), pointed out BMO. That is, when Canada's jobless rate rises far above the US rate -- as is the case now -- the Canadian dollar tends to come under some serious downward pressure, as monetary policy needs to respond accordingly.

According to the bank, there are two points to consider:

-- 1) The unemployment rate gap tends to lead the currency by six to 12 months, suggesting the loonie will remain "soggy" for some time yet.

-- 2) But, it appears that the currency has already taken a lot of the tough news on board, likely further pressured by the prospect of US protectionist actions in coming years.