Canadian jobs report brings expected CAD volatility

• NZD on the rise ahead of potential RBNZ rate hikes.

• Crypto on the rise after initial ETF sell-off.

• Canadian jobs report brings expected CAD volatility.

European markets are largely flat in early trade as we look to close out the week that has seen the S&P 500 hit 5000 (record high) and the Nikkei reach 37k (34 year high). Today sees things slow down after a week that has seen yet another prominent role played by earnings, with Arm Holdings helping to bolster the tech story that underpins the gains seen for US markets.

The Australian and New Zealand dollars are enjoying a strong end to the week, with the NZD showing particular encouragement after an ANZ report that saw the bank lay out expectations for the RBNZ to raise rates another 50-basis points in February and April. This stands in stark contrast to almost every other central bank, with overnight comments from RBA Governor Bullock laying out plans to cut rates even before inflation hits the 2-3% inflation target.

Cryptocurrencies are back in the limelight after a post-ETF selloff that saw Bitcoin fall over 20% from its January high of $49k. With BTC back up to $46k this morning, traders are clearly gearing up for the hotly anticipated halving event due in roughly two months. Should historical trends continue to hold, traders will be hoping to see a bumper 2024 given the previous pattern of post-halving outperformance. While some will have expected to see a post-ETF surge, the existence of those new products to provide the basis of a more broad-based demand picture during a bull-run given the easier access afforded to investors. Recent dollar strength has provided a short-term headwind for crypto, but we are look likely to see that USD rebound ease somewhat as market and FOMC rate expectations fall into alignment.

Traders will be keeping a close eye out for the upcoming Canadian jobs report, coming off the back of the five-month low for the employment change figure last time around (0.1k). Markets will be watching for any signs of additional concern in the jobs market, with economists instead predicting a welcome rebound that should highlight a degree of stability in the Canadian economy. With the Ivey PMI bumping up to a nine-month high this week, the rebound in crude has brought about a fresh bout of support for the CAD coming into today’s jobs report.