Canada’s bad February job report was quickly forgotten after Friday’s reported March surprise. The land with “the loonie” added +43k new jobs last month, the biggest increase in seven-months, which now pushes the six-month average to +10k. On the face of it, the double-digit print is not considered that bad given the subdued fundamental reporting of late. Digging deeper, about a 1/3rd of those gains came in the private sector, which suggests that there is room for improvement. Businesses are now beginning to ramp up hiring and investments to take advantage of the country’s weaker currency. The CAD is currently underperforming outright against its largest trading partner south of the 49th parallel ($1.0980).
A small concern is that most of last month’s job growth was due to a bounce-back in part-time jobs. The +30k rise follows two month’s of negative reporting. In the good’s sector, employment fell -15.6k, with manufacturing taking the brunt and reporting -9.2k job losses. Analysts note that this seems to contradict the apparent positive momentum in the sector – for instance the jump in exports for the month of February.
The loonie managed a hearty rally against the dollar immediately after the strong domestic report, but succeeded in giving back a third of its advance after the market digested the strong NFP report in detail. Not doing the CAD any favors was the softer than expected Canadian Ivey PMI print (55.2 vs. 58.3). The volatility in the pair remains confined, piggybacking the Fed’s strong conviction of draining their excess liquidity while Governor Poloz at the BoC policy is seen as firmly stuck in neutral.
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