Canada's February jobs report is released today! Unemployment is expected to rise to 6.7%, and oil prices surge to reverse the BoC rate hike path

According to the latest news APP report, Statistics Canada will release the February Labour Force Survey report today, and market participants have recently expected a modest rebound in job creation.Employment changesIt is expected to be10,000, reversing the decline of last month - 24,800. At the same time,unemployment rateIt is expected to rise to6.7%, up from 6.5% in January. The participation rate was confirmed to remain at 65% in January.

The employment data is being watched ahead of the release of Canada's Consumer Price Index (CPI) next Monday and the subsequent monetary policy decision by the Bank of Canada. The Bank of Canada maintained the base rate for the second time in a row at its last meeting in late 20252.25%No change, the market had generally bet that interest rates would remain unchanged for the full year of 2026. However, the Iran war has completely upended this policy path.

The crisis in the Middle East has reshaped the monetary policy perspective of most central banks, including the Bank of Canada. Markets have shifted from a small rate hike previously expected at the end of 2026 to a bet on more aggressive tightening to contain inflation. While the Gulf conflict is mainly transmitting inflationary pressures through energy prices, employment levels will still affect decision-making weights. For a visual comparison of key indicators, the table below presents the latest market consensus and historical data:

In-depth analysis shows that the conflict in Iran has led to a sharp surge in oil prices (currently Brent crude oil is near an all-time high), which unexpectedly supported the commodity-linked currency Canadian dollar during a period of risk aversion, but at the same time pushed up imported inflation, forcing the market to reprice the Bank of Canada path. If the employment data exceeds expectations significantly, it may temporarily boost the Canadian dollar; conversely, if it is weaker than consensus and superimposed on inflation concerns, it will further strengthen tightening expectations. Overall, the dominance of energy prices has overshadowed labor market signals, and BoC decision-making will focus more on inflation anchoring.

Valeria Bednarik, a well-known foreign exchange analyst, recently pointed out: "From a technical point of view, the USD/CAD is bearish. The exchange rate recently bottomed at 1.3525 and is currently only a few fluctuations above this level. The daily chart shows a slight rebound in the past few days, but the selling pressure around 1.3600 is strong and has not been able to break through effectively this week. The 20-day simple moving average (SMA) near this level is flat at 1.3640, and the support below is clearly located in the 1.3520 area. If it is effectively broken, it will expose the annual low of 1.3481, and further downside may open the door to 1.3400."

The current USD/CAD is hovering below 1.3600, pulled by two opposing forces: the dollar is strengthening due to safe-haven demand, while the Canadian dollar is benefiting from oil prices. After the data is released, if the result is stronger than expected, it will support the Canadian dollar, otherwise it will be under pressure; but with the Iran war dominating the market focus, exchange rate fluctuations may be mainly driven by energy and inflation expectations.

edit summary

The latest employment consensus and geo-inflationary shocks together outline the transition trajectory of Canadian monetary policy from stable to cautious tightening. Although the employment data acts as a short-term exchange rate catalyst, oil prices and inflation factors have dominated the pricing of the BoC path in 2026. Investors need to closely track the actual data and the progress of shipping recovery, and dynamically adjust the Canadian dollar and related asset exposure.

[Frequently Asked Questions]

Q1: What are the specific timelines and core expectations for Canada's February Labour Force Survey report to be released today?

The report will be released today at 12:30 GMT (20:30 Beijing time). The latest market consensus is for job growth10,000(Reverse last month - 24,800 decline),unemployment raterise to6.7%(Previously 6.5%), the participation rate is expected to rebound slightly. This is in sharp contrast to the actual data in January, with employment rebounding modestly butunemployment rateThe slight increase in labor force participation reflects signs of recovery in the labor market, but remains fragile.

Q2: How will the Iran conflict change the Bank of Canada's monetary policy expectations for 2026?

Before the geopolitical conflict, the market generally believed that the BoC would be maintained throughout the year2.25%Interest rates were unchanged. But after the Middle East conflict pushed up oil prices and inflationary pressures, traders turned to betting on more aggressive rate hikes to control the price spiral. Rising energy costs directly affect the CPI path, and although the superimposed employment data rebounds, it cannot fully offset the inflation risk. The BoC's "data-dependent" strategy has shifted from stable to potential tightening, and the probability of interest rate hikes by the end of 2026 has increased significantly.

Q3: How much does the employment data affect the Canadian dollar exchange rate, especially in the current geopolitical context?

The employment report usually has a significant impact on the Canadian dollar. If it is stronger than expected, it will support the Canadian dollar. Otherwise, it will be suppressed. But the Iran war dominates the market focus, and the surge in oil prices has provided an unexpected buffer for the Canadian dollar. Even if the data is weaker than expected, the Canadian dollar will not weaken significantly. USD/CAD is currently oscillating below 1.3600. The safe-haven dollar and oil prices support the Canadian dollar in a tug of war. The data are only short-term catalysts, and the long-term exchange rate is still dominated by energy and inflation expectations.