Canadian Dollar Forecast: USD/CAD Drops on Blowout Jobs Report

Canadian Dollar Forecast, The Canadian employment report showed a jobs increase of 336.6k, significantly better than the 160k expected. This report is very much a post-lockdown boom; given the sizeable jobs loss in the prior month. Elsewhere, the unemployment rate surprised to the downside, falling 1ppts to 5.5%, what is even more encouraging is that this also coincides with an increase in the participation rate. While in regard to the wage component, this rose to 3.3% from 2.4%, subsequently completing a set of strong labour market statistics for February. That said, despite being a very strong report, the data is unlikely to move the needle in regards to getting any more aggressive with regard to a 50bps hike, as reflected in the marginal move in OIS markets; instead, it merely endorses the BoC’s current hiking cycle at present. Keep in mind, that there is still another employment report before the next BoC meeting.

Market Response

Canadian Dollar Forecast, In reaction to the data, the Canadian Dollar rose against the US Dollar; resulting in USD/CAD falling to session lows of 1.2720. However; geopolitical tensions remains the key driver for now; while eyes will turn to the USD leg with the FOMC scheduled next week.