Canadian Employment at Record Highs but Risk Aversion Hits the Commodity Currencies
The US government should be envying Canada, its northern neighbor who reported stunning job growth in the month of February.
The market was forecasting an increase of only 3k jobs, but to their surprise, 43k new jobs were added to Canadian payrolls, keeping the unemployment rate at a 33 year low of 5.8 percent. The increase in jobs was concentrated in the Ontario region and in the construction, public administration, service and trade sectors. Wages were also very strong with a 4.9 percent increase in the average hourly rate, more than double the rate of inflation. Although this did lead to significant strength in the Canadian dollar, weak US job growth erased those gains on the fear that slower US growth will spillover to the Canadian economy. This is a significant possibility, but we believe that the strength of the Canadian data should lead to a further rally in the loonie in the coming week. The only piece of economic data scheduled for release from Canada is the trade balance, which we expect to be firm. Meanwhile Australia will be releasing employment numbers while New Zealand will be reporting retail sales. This set of data will be market moving for both currencies.