08:21 AM EDT, 07/31/2026 (MT Newswires) -- The Canadian dollar's recent strengthening to C$1.40 from C$1.42 against the US dollar appears challenging to sustain, as labor market indicators continue to point to soft underlying conditions, according to Rosenberg Research on Friday.

Payroll employment (SEPH) grew by only 24,000 monthly in May, compared with an 88,000 increase in the household survey, or Labour Force Survey, indicating that payroll data published on Thursday didn't fully support the stronger reading, said Rosenberg Research in a note.

Labor market utilization remains weak, with limited changes in hours worked and continued easing in wage pressures. Salaried workers' average hourly earnings fell 0.4% monthly in May, while hourly wage growth rebounded modestly after recent weakness, added Rosenberg.

The vacancy rate remains soft at 2.8% versus a historical average of 3.4%, reinforcing signs of a cooler labor market.

"We are not believers" in a Canadian dollar rebound, wrote Rosenberg in its note.