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Canada's February jobs report revealed a significant setback, with 83,900 jobs lost—the worst since the pandemic. Full-time job losses of 108,000 pushed the unemployment rate to 6.7%, weakening the Canadian dollar and boosting USD/CAD to 1.3728, its highest since March 7. While the report highlights economic challenges, surging oil prices have partially offset the currency's decline by improving Canada's trade balance. Analysts note that the data's volatility, driven by immigration-driven population estimates, makes it difficult to assess long-term trends. The three-month moving average for jobs has fallen to -32.8K, the lowest since 2021, raising concerns about sustained weakness. However, optimism persists for a second-half rebound as the economy adjusts to housing market declines and USMCA uncertainties. Market expectations remain for the Bank of Canada to maintain its current interest rate policy, with only a 41-basis-point hike priced in for the year. Traders will closely watch next week's inflation report and potential energy market shifts.
