USD/CAD – CAD rallies hard on strong jobs report

• Canada Feb net change in employment: +55.9K vs +1.2Ke
• Unemployment rate: +5.8% vs. +5.8%e
• Full time employment change: +67.4K vs +0.8Ke
• Part time employment change: -11.6K vs -5.7Ke
• Participation rate: 65.8% vs. 65.6%e
• Hourly Wage Rate y/y: 2.2% vs. 1.7%e

Canada has sideswiped the market with a massive job gain print this morning, all of them full-time, and this despite a weakening domestic outlook from a ‘dovish’ Bank of Canada (BoC) earlier this week.

The Canadian economy added a net +55.9K jobs last month versus a market expectation of +0.6K

The unemployment rate in February remained unchanged at +5.8%, because more people entered the labor force looking for work.

Earlier this week the Bank of Canada (BoC) took the market by surprises and was very “dovish.” Governor Poloz held its key interest rate steady at +1.75% as weaker global and domestic growth prospects led policy makers to express more caution about the pace of future rate increases.

He insists that the economic outlook continues “to warrant a policy rate that is below the neutral range, which is currently estimated around 2.5% to 3.5%.” Poloz warned the market that “weakness could extend into the spring before activity picks up in the second half of the year.”

The CAD has rallied aggressively on the surprise report, currently +0.51% higher at C$1.3402

Non-farm payroll (NFP)

Stateside, the employment picture for last month was not as rosy and the U.S dollar is under some pressure in early trading after the monthly jobs report showed that the domestic economy added +20K jobs in February, much lower than the +180K new jobs expected .

The dollar has come under pressure across the board (€1.1229, £1.3080, ¥110.90), along with 10-year Treasury yields. The yield on the benchmark 10-year Treasury note has fallen to +2.630%, while gold is up +0.8% at $1,296.50.

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