The Canadian dollar (CAD) was the best performer last week, thanks to a surprisingly strong job report that exceeded expectations. The report showed an increase of 150k in headline growth, with gains concentrated in full-time jobs in the private sector. The news has raised the possibility of further rate hikes by the Bank of Canada in the near future.
The report also showed a slowdown in wage growth, which is good news for the BoC, as it has expressed concerns about rising inflation. However, the central bank has made it clear that the pause in tightening is “conditional” and that the bar for additional rate increases is now higher.
The US dollar was mixed last week and needs some inspiration from the upcoming CPI report. The week saw big wagers in the US on betting Fed interest rates will hit 6% this year, compared to the Fed’s projection of 5.10%. The move came after the prior week’s stellar non-farm payroll data as well as hawkish comments from Fed officials, including Chair Jerome Powell.
Canadian Dollar Comes in as Top-Performer in February
The sterling and Swiss francs followed the Canadian dollar as the second and third-best performers, respectively. The sell-off in the euro contributed to the rise of both currencies. The euro ended as the worst performer, while the kiwi and yen were the second and third worst, respectively.
The market has also been speculating about the next BoJ governor, which has triggered some volatility. However, the biggest surprise of the week was the blockbuster Canadian job data. The report exceeded all expectations and was a welcome sign for the country’s economy, which has been struggling in recent months.
The Canadian dollar’s rise has brought some optimism to the country’s businesses and consumers. With the possibility of further rate hikes by the BoC, the market is hopeful that the economy will continue to grow and prosper in the coming months.
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