National Bank of Canada economists expect Canada\u2019s February Labour Force Survey to show employment rising by 10K after a decline in January. They project the unemployment rate at 6.7%, up by 0.2 percentage points.<\/p>\n
They expect the participation rate to edge up to 65.2% from 65.0%. This follows a 0.4 percentage point fall in January.<\/p>\n
The January merchandise trade balance is expected to improve as exports rise and imports fall. The trade deficit is forecast to narrow to C$0.25 billion.<\/p>\n
Exports are expected to be supported by higher prices for some raw materials, including gold. Separately, manufacturing sales are forecast to drop 3.3% month on month in January.<\/p>\n
The decline in manufacturing sales is linked to falls in transportation equipment and machinery. The article notes it was produced using an AI tool and reviewed by an editor.<\/p>\n
We are seeing a familiar pattern develop when we look back at the economic forecasts from early 2025. At that time, we were anticipating a modest job gain for February but a rising unemployment rate due to more people looking for work. This dynamic of a softening labour market is intensifying today.<\/p>\n
The latest Labour Force Survey data for February 2026 showed a net loss of 5,000 jobs, which was a significant miss from expectations of a small gain. This pushed the unemployment rate up to 6.9%, a full two-year high, as the participation rate climbed to 65.4%. This confirms the trend of underlying weakness that was becoming apparent this time last year.<\/p>\n
This sustained labour market cooling significantly increases the probability of a Bank of Canada rate cut within the next quarter. We are now seeing the market price in a greater than 70% chance of a 25 basis point cut by the July meeting, a sharp increase from just a month ago. Therefore, positions that benefit from falling short-term interest rates, such as buying call options on BAX futures, should be considered.<\/p>\n
Consequently, the outlook for the Canadian dollar has weakened, with rate differentials poised to favour the US dollar. The USD\/CAD exchange rate has already broken above 1.37, and a move towards 1.39 now seems likely if economic data continues to disappoint. Traders should look at buying put options on the Canadian dollar to hedge or speculate on further downside.<\/p>\n
The sharp drop in manufacturing sales seen in January 2025 also serves as a cautionary tale for our equity markets today. We have just seen preliminary January 2026 manufacturing sales data point to a 2.8% contraction, led by weakness in the auto sector. Hedging broad market exposure by purchasing puts on the S&P\/TSX 60 index may be a prudent strategy against a potential slowdown in corporate earnings.<\/p>\n
However, the strength in gold-linked exports noted in the 2025 forecast highlights a potential area of opportunity. With ongoing global uncertainty and the prospect of lower interest rates, gold prices have remained firm, recently trading above $2,150 per ounce. Traders could explore call options on gold mining stocks as a potential hedge against broader market weakness.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" National Bank forecasts 10K job gain, unemployment 6.7%, higher participation; trade deficit narrows, manufacturing sales fall.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-51059","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/51059","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=51059"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/51059\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=51059"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=51059"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=51059"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}