CAD: Weaker employment data and CPI expected compared to Oil-related risks – TD Securities

101 finance2026/03/16 11:27

By:101 finance

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Canadian Economic Data Softens While Oil Prices Take Center Stage

According to analysts at TD Securities, Canada's headline Consumer Price Index (CPI) is anticipated to ease to a 1.9% annual increase in February. This moderation, driven by weaker core inflation readings, places inflation below the Bank of Canada's earlier forecasts. Nonetheless, analysts note that the immediate impact of this softer inflation outlook is diminished due to upward pressure on oil prices stemming from ongoing tensions involving Iran.

TD Securities projects that headline CPI will decelerate by 0.4 percentage points to 1.9% year-over-year in February, matching market expectations. Monthly price growth is expected at 0.7%, largely influenced by rising fuel costs and typical seasonal trends.

Core inflation indicators, such as CPI-trim and CPI-median, are also expected to slow slightly to 2.3% and 2.4% respectively, aligning with consensus estimates. Should these forecasts materialize, both headline and core inflation would remain below the Bank of Canada's projections from its January Monetary Policy Report.

Despite this, the analysts emphasize that the near-term policy outlook is more heavily shaped by global developments—particularly the inflationary risks posed by elevated crude oil prices linked to the Iranian conflict.

On the employment front, Canada saw a significant loss of 84,000 jobs in February, following a decline of 25,000 positions the previous month. The unemployment rate edged up by 0.2 percentage points to reach 6.7%.

This disappointing labor market data tempers recent signs of strength and highlights a more subdued domestic environment ahead of the Bank of Canada's March meeting. However, the influence of these figures on the central bank's decisions may be limited, given the overriding impact of rising oil prices.

TD Securities maintains a preference for selling Canadian assets relative to U.S. counterparts in the 10-year segment, viewing current conditions as a favorable entry point for such trades.

(This article was produced with the assistance of AI technology and subsequently reviewed by an editor.)

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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Dow Jones•2026/10/08 15:00