Week in FX Americas – Bank Of Canada Pushes Rate Hikes Further Out The Curve

Canada's weak growth in the second-half of 2012 has finally shown up in the job numbers. January's employment decline (–21.9k) follows on the heels of five-months of stellar job reporting. The data was only one of a “negative data hat trick” reported in Canada yesterday.

Canadian January housing starts also happened to collapse (+161k vs. +196k). The only bright headline was the Canadian trade balance improving (–0.9b vs. –1.9b), but for the “wrong reasons.” The import figure fell –2.8%, which suggests that domestic demand, may have gone “walk-about.”

Digging deeper into the employment numbers, wage inflation is a non-issue as average hourly wages for permanent workers has regressed to 2011 levels. This would suggest that any tightening by the Bank of Canada will occur well after the new Governor of the Bank of England has finally left his Canadian duties. For the average investor, a +7% unemployment rate looks good for the...