Friday's January jobs report continued the string of strange labour market reports, with a big drop in the participation rate taking the unemployment rate down 0.3 percentage points to 6.5%, RBC Capital Markets said in its weekly soundbites. Another big swing, lower this time, in the labor force and participation rate pushed the unemployment rate 0.3pp lower despite a 25,000-job decline.
US equity indexes rebounded ahead of Friday's close, with the Dow Jones Industrial Average surging past the 50,000 milestone for the first time, amid a broad-based rally led by technology and value-oriented sectors.
Fed Vice Chair Philip Jefferson said that he supported the FOMC's decision to hold the policy rate steady at its January meeting and is "cautiously optimistic" about the outlook for the US economy, adding that he sees the current policy rate as already close to neutral.
US consumer sentiment reached its highest reading since August, but remained low compared with year-ago levels amid persistent concerns related to inflation and the labor market, preliminary results from a University of Michigan survey showed Friday. The main sentiment index rose to 57.3 this month from 56.4 in January.
The Toronto Stock Exchange is up near 370 points midday with most sectors higher. Best performers are miners, boosted by higher gold prices, and healthcare. Telecoms, down 1.1%, is the worst performer. The focus in Canada is on the jobs data. The unemployment rate was pulled down by 119,000 people leaving the labor force, but the economy still shed 25,000 jobs, TD points out.
European stock markets gained in Friday trading as the Stoxx Europe rose 0.9%, Germany's DAX gained 0.9%, the FTSE 100 was up 0.6%, France's CAC increased 0.5%, and the Swiss Market Index advanced 0.3%. According to the European Central Bank's Q1 survey of professional forecasts, headline and core harmonized index of consumer prices inflation expectations were unchanged, as were GDP growth expe...
The University of Michigan's preliminary consumer sentiment index rises to 57.3 in February from 56.4 in January, higher than expectations for a decrease to 55.0 in a survey compiled by Bloomberg. This is the highest reading since August 2025, Michigan said.
Rosenberg Research revised its briefly-held constructive view on the Canadian dollar in light of the economy's "complete failure to respond to the Bank of Canada's rate cuts so far. Although the Canadian dollar has rallied against the US dollar in the last few months, this has been a consequence of US dollar weakness rather than loonie strength, noted Rosenberg Research.
The broad market exchange-traded fund SPDR S&P 500 ETF Trust was up 0.6% and the actively traded Invesco QQQ Trust was 0.7% higher in Friday's premarket activity, ahead of the University of Michigan consumer sentiment report release.
Employment in Canada fell to start the year, but with fewer people seeking jobs, the unemployment rate also surprisingly came down, said CIBC after Friday's Labour Force Survey. The 25,000 decline in employment compared with a consensus expectation for a 5,000 gain, although the reduction was driven exclusively by part-time positions, with full-time jobs actually increasing, noted the bank.
Employment edged down in January by 25,000 jobs, or 0.1% month over month, and the employment rate decreased 0.1 percentage point to 60.8%, said Statistics Canada on Friday it its Labour Force Survey. January's job losses were worse than the 5,200 consensus gain provided by MUFG. In January, employment fell by 27,000 among core-aged women, wrote Canada's statistical agency in a statement.
The US dollar fell against its major trading partners early Friday ahead of the release of the University of Michigan's preliminary consumer sentiment index for February at 10:00 am ET, followed by the St. Louis Federal Reserve's latest gross domestic product Nowcast estimate for Q4 around midday.
Canada will publish the Labour Force Survey for January at 8:30 a.m. ET on Friday, said Scotiabank. The bank has gone with an estimated gain of 15,000 and a stable unemployment rate of 6.8%. Canada has surprisingly created almost 200,000 jobs over the past four months of consecutive gains, stated Scotiabank.
The Board of Mexico's central bank unanimously decided to keep the policy rate unchanged at 7.00% on Thursday, signaling that demand-side pressures aren't a key driver behind its policy assessment, said BBVA Research.
European bourses tracked moderately higher midday Friday as traders weighed earnings, and Thursday's report from the European Central Bank that the continental economy is expanding, and inflation is generally muted. Bank, oil, and property stocks led gains on regional trading floors, while food and retail shares lagged.
Sterling has weakened sharply over the last couple of trading days, said MUFG. After closing below support from the 200-day moving average at the start of this week for the first time sine April of last year and hitting a low of 0.8613, EUR/GBP jumped to a high Thursday of 0.8721, wrote the bank in a note to clients.
Societe Generale in its early Friday economic news summary pointed out: -- Losses snowball for tech stocks, crypto correction deepens, Nasdaq -6.4% from January top, US dollar and United States Treasury safe-havens. -- India: The central bank leaves key repo rate unchanged at 5.25%, maintains neutral stance, growth outlook favorable on recent trade deals.
The Toronto Stock Exchange closed sharply lower on Thursday for the second time in a week, with the resources-heavy exchange weighed down by deflated commodity prices and fresh economic updates, as data showed signs of a slowdown in the U.S. labor market and as Desjardins noted the Bank of Canada Governor has thrown "more cold water on the possibility of rate cuts".
Atlanta Fed President Raphael Bostic said that he believes the FOMC should hold rates steady in 2026 and that it will take time for Kevin Warsh, the nominee to replace Jerome Powell as Fed share, to convince a majority of the committee that rates need to be lower.
The European stock markets were tracking lower in Thursday trading as The Stoxx Europe fell 1.1%, Germany's DAX dropped 0.5%, the FTSE 100 lost 0.9%, France's CAC was down 0.3%, and the Swiss Market Index declined 0.3%. The European Central Bank decided to keep its three key interest rates unchanged.
The Czech central bank on Thursday said its board kept interest rates unchanged, with the two-week repo rate at 3.50%, the discount rate at 2.50% and the Lombard rate at 4.50%. This decision was expected by market analysts, Societe Generale noted before the decision. All seven members voted in favor of this decision, wrote CNB in its policy statement.
President Christine Lagarde's comments at Thursday's policy meeting press conference seemed to create more confusion than certainty over the next European Central Bank move, said ING.
Thursday's wafer-thin majority on the Bank of England's Monetary Policy Committee in favor of holding Bank Rate at 3.75% instead of lowering it by 25bp indicates that it won't be long before the BoE lowers interest rates again, said Berenberg. The 5-4 vote was much closer than the consensus of 7-2, noted the bank.
US equity futures were down ahead of Thursday's opening bell as traders digested labor market data ahead Amazon's (AMZN) earnings report. Dow Jones Industrial Average futures were 0.3% lower, S&P 500 futures were down 0.5%, and Nasdaq futures were 0.7% lower. Amazon (AMZN) is scheduled to report earnings after the closing bell.
The European Central Bank decided to keep rates on hold on Thursday, said ING. The official policy announcement also illustrates that the ECB still sits comfortably in its 'good place', wrote the bank in a note. As the last ECB rate cut dates back to June last year, it's fair to say that the hurdle to cut again is very high, stated ING.
US initial jobless claims rose to a level of 231,000 in the week ended Jan. 31 from an unrevised 209,000 level in the previous week, compared with expectations for a smaller increase to 212,000 in survey of analysts compiled by Bloomberg. The four-week moving average increased by 6,000 to 212,250 after increasing by 2,250 to a level of 206,250 in the previous week.
The US dollar rose against its major trading partners early Thursday ahead of the release of weekly jobless claims data at 8:30 am ET, rescheduled job openings and hiring data for December at 10:00 am ET and weekly natural gas stocks data at 10:30 am ET. Atlanta Federal Reserve President Raphael Bostic is due to speak at 10:50 am ET.
BBVA Research said it expects Mexico's central bank to leave the policy rate unchanged at 7.00% later Thursday and to continue to stress downside risks to growth despite near-term inflation risks. BBVA Research estimates that Banxico will revise its inflation forecasts upward.
The euro has continued to correct lower against the US dollar ahead of Thursday's European Central Bank policy meeting, said MUFG. After briefly hitting a high of 1.2081 last week, EUR/USD has dipped back below the 1.1800 level overnight Wednesday, wrote the bank in a note to clients.
European bourses tracked moderately lower midday Thursday despite firming tech stocks, as traders awaited pending rate-decisions by the Bank of England and European Central Bank. Retail stocks also led gains on continental trading floors, while bank and property shares lagged. On the commodities front, British oil major Shell slipped 0.7% after missing Q4 profit expectations.
The EUR/USD this week has remained quite resilient -- especially given the recent spike in energy prices, said ING. Thursday's challenge to EUR/USD will come from the European Central Bank press conference on the policy decision later in the day at 2:45 p.m. CET. It isn't just EUR/USD that has been strong.
The US services sector saw continued expansion in January as employment grew, though price pressures persisted, two separate surveys showed Wednesday. The Institute for Supply Management's services purchasing managers' index held steady at 53.8 last month sequentially.
Employment in the US private sector increased less than projected in January, ADP reported Wednesday, as the Bureau of Labor Statistics announced a revised release date for last month's nonfarm payrolls report. Private jobs rose by 22,000 in January, according to the payrolls processing firm.
Azerbaijan's central bank on Wednesday said its Management Board decided to lower all parameters of the interest rate corridor by 25bps, with the key refinancing rate lowered to 6.5%. The rate reduction takes effect on Thursday. The decision has been made considering the alignment of actual inflation with the forecasted target range, wrote the central bank in its policy statement.
Iceland's central bank Wednesday said its Monetary Policy Committee decided to keep its interest rates unchanged, in a unanimous decision. The CBI's key interest rate -- the rate on seven-day term deposits -- remain 7.25%. Inflation now measures 5.2% and has risen once again, noted the central bank in its policy statement.
The Institute for Supply Management's US services index remained at 53.8 in January, compared with expectations for a decrease to a reading of 53.5 in a survey compiled by Bloomberg. The ISM's reading follows mixed results from regional Federal Reserve bank measures, which the S&P Global measure indicated mild expansion.
Poland's central bank said its Monetary Policy Council decided to hold rates on Wednesday. The analyst consensus was nearly evenly split between an unchanged rate and a 25bps cut, wrote Commerzbank in a note published earlier Wednesday.
ADP's monthly measure of private payrolls showed a 22,000 increase in January, below expectations compiled by Bloomberg for an increase of 45,000. The January gain followed a downwardly-revised 37,000 jobs increase in December.
Sterling has continued to strengthen at the start of this week ahead of Thursday's Bank of England policy meeting, said MUFG. EUR/GBP broke below support from the 200-day moving average at around 0.8650 on Monday.
The last data input before Thursday's European Central Bank policy meeting is Wednesday's eurozone flash consumer price index estimate for January, said ING. Tuesday's surprise drop in French inflation left little to no mark on foreign exchange, and the bank doubts Wednesday's eurozone-wide figures have much impact potential.
Societe Generale in its early Wednesday economic news summary pointed out: -- United States yields firm ahead of APD and ISM services, 10-year resistance 4.30/4.35%. Yen slides on carry demand, AUD/JPY nears 110. -- China's RatingDog PMI services inches up to 52.3 in January from 52.0. Composite rises to 51.6 from 51.3 in December. -- Day ahead: Eurozone flash consumer price index.
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