Canada’s February employment report exceeded expectations with 259,000 job growth. Analysts at the National Bank of Canada continue to believe that the recent labor market soft spot should be temporary, as strong economic growth is expected to boost hiring.
The Canadian dollar even strengthened on stronger-than-expected employment data. Sterling, kiwi, and the Swiss franc are weaker today.
The rise in US yields is likely to put pressure on USDCAD, pushing the pair higher afterward. Cyclically, at least in the short term, the US looks much more attractive, indicating that the risks are balanced at the moment.
Employment in Canada in February rose by 259,000, or 1.5%, well above expectations of 98,000. The number of part-time jobs increased by 171 thousand, and with full-time employment – by 88 thousand. The unemployment rate fell by -1.2% to 8.2%, which is well below expectations of 9.2%. This is also the lowest level since March 2020. The level of economic activity did not change and amounted to 64.7%.
Also in Canada, capacity utilization rose to 79.2% in Q4, above expectations of 77.9%. In January, wholesale sales rose 4.0% mom, below expectations of 5.1% mom.
The Canadian dollar is far from the best currency in the G10 this Friday, and it is the only currency that is trading on a more stable basis compared to the US dollar. The power does not come from the broader market; indeed, risk appetite is rather fragile (stocks and commodities have largely fallen) amid concerns about rising US bond yields. Rather, the recent CAD rally is the result of a significantly better than expected February labor market report.
USD/CAD is now below the 1.2500 level again and is currently exploring multi-year lows set in late February around 1.2460. A break below that level would open the door (technically) for a move back to early 2018 lows in the 1.2200 regions if the USD permits.
Recent gains in the Canadian dollar have propelled the currency to second place in this week’s G10 scorecard, with the Canadian dollar up about 1.5% weekly versus the US dollar and only lagging behind the Norwegian krone, which is up 1.6% against the US dollar. the US dollar. In third place is the Australian dollar, which rose 1.4% over the week against the dollar.
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