The USD/CAD currency pair surged to near 1.4380 during Friday’s North American session, driven by a confluence of economic data from both sides of the border. The Canadian Dollar faced headwinds due to recent tariffs and disappointing labor market figures, while the US economy presented mixed signals. A series of economic data releases and policy changes underpinned these market movements, highlighting shifting dynamics in North American trade and labor markets.
In Canada, the economic landscape presented challenges as the Canadian Dollar underperformed. Statistics Canada reported a meager addition of 1.1K workers to the workforce, falling significantly short of economists' expectations of 20K new jobs. This figure also marked a steep decline from the 76K jobs added in January. The jobless rate nudged up slightly to 4.1% from the previous 4%, signaling a slowdown in employment growth. These soft labor market conditions have increased speculation that the Bank of Canada may consider an interest rate cut at its upcoming monetary policy meeting on Wednesday.
The Canadian Dollar's struggles were compounded by external pressures, notably US President Donald Trump's tariffs. President Trump had previously imposed a 25% tariff on Canada and Mexico, adversely affecting the Canadian economy. However, in a recent move, he ordered a reduction in the duty rate for non-USMCA-compliant potash to 10% from 25%. Additionally, tariffs on goods compliant with the United States-Mexico-Canada Agreement (USMCA) have been relaxed until April 2.
Across the border, the United States' economic indicators offered a mixed picture. The Nonfarm Payrolls (NFP) report revealed that 151K jobs were added, slightly missing estimates of 160K but significantly higher than January's figure of 125K. Meanwhile, Average Hourly Wages accelerated robustly to 4%, up from the prior release of 3.7%. The Unemployment Rate held steady at 6.6%, performing better than anticipated estimates of 6.7%.
In terms of inflation, the headline Consumer Price Index (CPI) rose by 0.25%, while the core index advanced by 0.27%. Although consumer price inflation showed strength in 2025, there are indications that price growth cooled in February. This nuanced inflation data adds complexity to market expectations regarding future monetary policy directions.
In a noteworthy policy development, President Trump signed an executive order establishing a Strategic Bitcoin Reserve on Friday. This move reflects an evolving approach to digital currencies within the US economic landscape and could have broader implications for international financial markets.