US non-farm payrolls for January showed an increase of 151,000, slightly below the expected 160,000. In Canada, employment change for February was 1,100, which fell short of the 20,000 estimate.
Federal Reserve Chair Jerome Powell stated that there is no urgency to adjust interest rates, while other Fed officials noted a steady monetary policy is likely given current inflation data. Canada’s trade minister reported that 40% of Canadian products exported to the US comply with free-trade agreements.
Market Reactions And Tariff Concerns
Markets experienced varied movements, with gold rising to $2,911 and the S&P 500 gaining 0.5%. However, threats of tariffs from Trump against Canada pushed USD/CAD to a session high of 1.4426, contributing to the loonie’s underperformance.
While a relief rally occurred in equities, tariff implications remained a dominant factor, as investors prepared for upcoming decisions related to steel and aluminium tariffs. The market remains cautious as it heads into the next trading week.
The data released last week provided insight into the current state of employment and trade. The slight miss in US job growth compared to forecasts suggests a cooling but not necessarily a weakening labour market, reinforcing the stance taken by Powell and other central bank members. Similarly, Canada’s employment figures falling well below estimates indicate subdued hiring. These factors are shaping expectations around monetary policy, influencing how traders position themselves in the weeks ahead.
Powell’s statement regarding interest rates aligns with the broader sentiment among policymakers. Inflation data does not yet justify an immediate shift, and officials appear inclined to maintain stability. This approach, combined with trade-related concerns, has influenced the direction of currency markets, particularly given the sharp movement in the Canadian dollar. With a notable portion of exports to the US already meeting free-trade criteria, adjustments to current agreements may have less of an impact than initially thought. However, the mention of potential tariffs adds another layer of uncertainty.
Market movements over the past week reflected these developments. Gold’s steady climb highlights a preference for safer assets amid ongoing trade tensions and policy discussions. Meanwhile, the S&P 500 posted gains, suggesting optimism remains despite external pressures. Yet, currency markets told a different story, as concerns over tariffs weighed heavily on the loonie.
Looking Ahead To Economic Reports
With discussions surrounding steel and aluminium still unresolved, concerns about trade policies remain at the forefront. The relief rally seen in equities signals some confidence, but trade uncertainty cannot be ignored. Future statements from US officials could either solidify current market positioning or lead to another shift in expectations.
As the next trading week begins, the impact of upcoming economic reports and any further commentary from the Fed will be closely analysed. The path forward depends largely on whether recent trends continue or if new variables emerge that could alter expectations.
