Canada’s fiscal year-to-date budget deficit is $21.72 billion, a decrease from $22.72 billion this time last year. In December, a surplus of $1 billion was reported, compared to a deficit of $4.71 billion in December of the prior year.

This fluctuation in figures is partly due to timing shifts concerning monthly pay periods, particularly after a large deficit in November. The government’s two-month HST (sales tax) holiday, initiated in mid-December, is anticipated to cost nearly $2 billion and will be reflected in future reports.

Overall, Canada’s federal fiscal condition remains stable, providing the new government with some flexibility in fiscal policy decisions.

When looking at the broader picture, the year-to-date budget deficit narrowing to $21.72 billion from the previous year’s $22.72 billion signals modest improvement. The surplus of $1 billion in December starkly contrasts with the $4.71 billion shortfall recorded in the same month of the prior year—largely influenced by timing shifts in government payments. This kind of volatility has been observed in past years and should be noted when assessing short-term trends.

November’s pronounced deficit shaped expectations, but December’s numbers suggest that wasn’t an enduring pattern. In part, this was due to the shifting of monthly pay periods, which can create variances that need to be considered carefully when interpreting financial data. Additionally, December’s temporary gain does not account for the impact of the sales tax holiday introduced late in the month. With nearly $2 billion in deferred revenue from this policy, future reports will reflect a more accurate picture of the government’s fiscal position once delayed receipts are fully accounted for.

The wider context offers a stable foundation. A fiscal environment that isn’t rapidly deteriorating ensures that policy decisions remain flexible rather than reactive. While revenue adjustments, such as the tax holiday, can temporarily distort figures, they do not indicate long-term structural shifts without further supporting trends.

Given these developments, attentiveness to revenue data in the coming months will be essential in determining whether December’s budgetary strength was an anomaly or part of a broader pattern. The timing of fiscal policies often skews short-term readings, but underlying conditions remain the primary determinant. With upcoming reports expected to capture the full effect of recent measures, future assessments will benefit from a more complete data set.

For those tracking fiscal trends, observing how expenditures align with revenue shifts will provide useful insights into the sustainability of recent numbers. If future months show a return to broader deficits beyond what would be expected from seasonal variations, the extent of spending commitments will warrant closer examination.

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A group of policymakers is advocating for a pause in monetary policy changes, but this is not expected to influence the upcoming ECB meeting. The ECB is anticipated to reduce the deposit rate by 25 basis points during this session.

Predictions suggest that inflation projections for 2025 may be adjusted upwards, influenced by potential US tariffs. It is estimated that inflation may take longer than previously thought to meet targets, accounting for the possibility of tariffs.

The expectation is for one more rate cut in April, though risks are increasing that this may shift to June.

There is a growing argument among policymakers for a slowdown in policy adjustments, yet this is unlikely to alter what is coming at the next European Central Bank gathering. As of now, expectations remain firm that interest rates on deposits will be cut by a quarter of a percentage point.

Looking ahead, inflation estimates for 2025 might be revised higher. Part of this reflects concerns around possible new tariffs from the United States, which could affect trade costs and consumer prices in Europe. If those trade restrictions materialise, achieving the central bank’s inflation target may take longer than currently forecast.

At present, there is an assumption that another lowering of interest rates will happen in April. However, the possibility of a delay until June has been growing. If the economic outlook shifts in the next few months, or if inflation remains stubbornly high, then policymakers may opt to take more time before adjusting rates again.

For those in derivative markets, these potential shifts in monetary policy could require adjustments to existing strategies. If rate cuts arrive more slowly than expected, yield curves may steepen unexpectedly, requiring a rethink in positioning. If inflation expectations edge up, that could influence pricing for longer-term contracts.

We will need to watch how expectations evolve around inflation and trade policies. Any fresh developments on tariffs could force a reassessment, not just for inflation projections but also for how aggressively central banks adjust monetary policy. If delays in rate cuts become more likely, both short-term and longer-term market pricing will need to reflect that change. Keeping a close eye on forward guidance from monetary authorities becomes increasingly important.

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Equities have seen a notable increase, with the S&P 500 up 34 points after starting lower. This small recovery follows a significant decline the previous day.

Possible factors include month-end flows or short-covering following a drop in major tech stocks. Nvidia has gained 2% after initially declining by the same percentage in pre-market trading.

Bond and foreign exchange markets have remained stable, with US 2-year yields showing little change since the market opened. The yield curve has dipped by 2-4 basis points today.

The Canadian dollar is experiencing a rebound, but generally, the US dollar is strengthening, which is atypical during a ‘risk on’ scenario. Meanwhile, bitcoin has recovered to $84,000 after dipping below $80,000 earlier in Asia.

A modest recovery in equities suggests that recent selling pressure may have been overextended, at least in the short term. Gains in the S&P 500, initially weighed down at the open, point to either opportunistic buying or the unwinding of negative bets placed during the previous trading session. This is particularly noticeable in stocks that were hit hardest. Nvidia’s movement exemplifies this—early losses were quickly erased as traders stepped in, either covering past positions or seeing value after the pullback.

Bond markets have presented a relatively calm front today, with shorter-duration yields largely unchanged. This lack of movement suggests that concerns about interest rates or economic data have not materially shifted sentiment. The small dip in the yield curve, though present, is within a range that doesn’t indicate a strong directional bias. Forex markets, on the other hand, tell a slightly different story. The US dollar’s firmness, despite renewed bullishness in equities, goes against the typical pattern where risk appetite weakens demand for safer assets. A recovering Canadian dollar does little to disrupt this broader dynamic.

Bitcoin’s rebound stands out, particularly after slipping below a key round number during Asian trading hours. The ability to reclaim lost ground suggests that the downside move may have been more about short-term positioning rather than a deeper shift in outlook. The level of confidence in holding digital assets remains, with traders stepping back in following a period of softness overnight.

For those involved in trading derivative contracts, the way these markets have behaved provides useful cues. The sharp decline in stocks yesterday may not have altered broader sentiment as much as initially feared. When a deep sell-off is followed by buyers returning quickly, it implies that participants haven’t fully lost confidence in holding long positions. That said, with bond yields staying put and the dollar still in demand, it raises questions about how much conviction there truly is behind this bounce. The contrast between stronger equities and a resilient dollar suggests that today’s buying might owe more to short-term adjustments than a broader shift in confidence.

Short-term price swings in individual shares confirm how reactive the market currently is. Nvidia’s reversal shows just how quickly sentiment can shift in a single session, underscoring that positions must be managed with flexibility. Taking on risk too aggressively in one direction carries the potential for being caught on the wrong side of abrupt reversals.

Market conditions remain fluid, and while today’s movement appears constructive for risk appetite, the lack of follow-through outside equities and bitcoin suggests traders should be watching for any signs that this recovery might struggle to extend. Keeping an eye on how other asset classes react moving forward will help in assessing whether this remains a bounce within a wider pullback or if sustained momentum is genuinely building.

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The US Dollar is maintaining a steady position on Friday following the US Personal Consumption Expenditures (PCE) data for January, which met expectations. The US Dollar Index (DXY) is closing the week around 107.30, attempting to sustain this level amid ongoing tariff confirmations from US President Donald Trump.

PCE data showed the January monthly headline at 0.3%, unchanged from previous figures, while core PCE rose to 0.3% compared to 0.2% in December. The overall PCE year-on-year increased to 2.6%, slightly above the expected 2.5%.

The Chicago Purchasing Managers Index for February surged to 45.5, exceeding the forecast of 40.6 and improving from January’s 39.5. Equities in the US are moving higher, contrasting with declines in Asian and European markets.

The Federal Reserve’s monitoring of economic conditions influences US monetary policy. Interest rates are adjusted based on inflation and employment levels, with current forecasts showing a 29.7% chance of rates remaining unchanged in June.

Technical analysis of the DXY indicates the importance of maintaining support around 107.00. Resistance levels include the 55-day Simple Moving Average at 107.97 and a breakthrough above 108.00 could lead toward 108.50. Conversely, nearby support levels include 106.80 and 106.52.

These recent developments provide traders with a clear indication of the current dynamics at play. With PCE inflation figures aligning with forecasts, the Federal Reserve is unlikely to see any immediate reason to shift its stance. Some had anticipated a softer reading, so inflation holding steady at expected levels reinforces the argument that rate cuts may still be some distance away.

January’s report showed that headline PCE rose 0.3% on a monthly basis, unchanged from the previous figure. Core PCE, which strips out food and energy, ticked higher to 0.3% after sitting at 0.2% in December. The annual increase pushed to 2.6%, just slightly beyond the expected 2.5%. While this isn’t a cause for alarm, it does suggest inflation remains stubborn enough to justify the Federal Reserve’s patient approach.

Another data point that caught attention was the Chicago PMI, which came in at 45.5—well above both the expected 40.6 and the prior month’s 39.5. This suggests that despite broader global concerns, certain aspects of the US economy continue to show resilience, particularly in manufacturing. Meanwhile, equities have pushed higher in the US, in stark contrast to the declines seen in Asian and European markets. The divergence reflects the strength of American economic data relative to other regions, as well as some rotation out of international stocks and into US markets.

The Federal Reserve’s stance remains data-dependent, as officials carefully balance incoming reports. At the moment, market expectations suggest only a 29.7% chance that interest rates will stay unchanged in June. This tells us that traders still lean toward an eventual reduction but see little reason to expect an imminent shift. If inflation readings hold near their current levels in the coming months, the likelihood of rate adjustments will continue to evolve.

For currency traders, the current price movements in the US Dollar Index highlight key technical levels worth watching. Support remains near 107.00, which traders will be monitoring to see if buyers step in again. If the index loses that level, 106.80 and 106.52 become the next logical areas to test. On the upside, the 55-day Simple Moving Average sits at 107.97, just shy of 108.00. A move higher through that threshold could open the way toward 108.50, something momentum traders will be paying close attention to.

Stability in the dollar has come despite ongoing discussions on trade tariffs. The recent confirmations from Donald have kept investors on alert, as shifts in US trade policy could have currency implications. While the immediate effect on the dollar has been muted, future developments must be monitored closely.

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The AUD/USD has been declining this week, moving past important support levels. Recently, it fell below the 50% retracement level and tested a swing level at 0.62348.

Today, the pair continued to decline, breaching the 61.8% retracement at 0.62097 and entering a target zone between 0.6196 and 0.6202. This breakdown suggests potential for continued selling pressure.

If the pair manages to find support near the 61.8% retracement, a bounce could target the levels that were recently broken. Upside resistance includes the swing level at 0.62348 and the 50% retracement at 0.62474.

The ongoing decline in the Australian dollar against the US dollar has brought it firmly into lower price levels. After slipping through the midpoint of its latest move, it found temporary footing at a prior support level. That area initially attempted to hold back further losses but was eventually breached.

With continued momentum, today’s session saw the pair move under another measured retracement level, reinforcing bearish sentiment. As it trades within a narrow range just below this threshold, there is little in the way of technical barriers to prevent further downside. However, traders will be watching closely for signs of exhaustion in selling pressure. Should stabilisation occur here, a recovery could see previous support zones tested from below.

A potential rebound would put attention back on prior swing levels. The first obstacle would be the spot where selling accelerated most recently. Beyond that, price action could aim for a retest of the midpoint that previously failed to hold. This would serve as an important test of whether bearish control remains firm or if buyers can gain back some ground.

Given the movement over the past sessions, traders may want to keep a keen eye on how price behaves around these levels. A sustained presence below the recent break could reinforce ongoing downward pressure. Conversely, a shift back above breached zones might indicate that sentiment is beginning to turn, at least in the short term.

As we assess what’s ahead, it becomes clear that market participants should be prepared for continued movement in either direction. The recent trajectory highlights areas that have drawn attention from both sellers and buyers, providing useful reference points for those examining potential trade setups.

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Colombia’s national jobless rate for January stands at 11.6%, a rise from 9.1% reported previously. This indicates an increase in unemployment, signalling potential challenges in the labour market.

In related news, the EUR/USD remains around 1.0400 following recent US PCE data. Gold has fallen to new lows below $2,840, reflecting negative market conditions.

GBP/USD is stable, holding above 1.2600. Concerns around tariff measures from the US have also resurfaced, raising uncertainty in the trading environment.

Overall, current statistics suggest fluctuations in both the job market and forex trading activities.

The rise in Colombia’s jobless rate to 11.6% from the previous 9.1% suggests that employment conditions took a downturn at the start of the year. This could point to businesses facing difficulties, potentially scaling back on hires or cutting jobs. From a broader perspective, traders should consider that higher unemployment may lead to reduced consumer spending, which can, in turn, impact economic growth.

Meanwhile, the EUR/USD remains close to 1.0400, showing that recent US PCE figures haven’t driven big moves in the currency pair. If inflation trends continue influencing expectations around Federal Reserve policy, this level may face renewed tests in the coming sessions. The same can be said for gold, which has slipped below $2,840. Such a decline typically reflects weaker demand or shifting investor sentiment. If this trend persists, some may see further downside potential, particularly if economic data keeps reinforcing a firmer dollar.

At the same time, the pound remains steady above 1.2600. The relative stability in the GBP/USD pair contrasts with concerns elsewhere, as discussions around potential US tariff measures add uncertainty in global trade. If new policies come into play, they could affect currency flows and investor decisions in ways that may not be immediately priced in.

Taken together, these updates highlight notable moves across markets, with employment figures, inflation data, and policy discussions shaping sentiment. Looking ahead, traders will want to weigh these shifts carefully, balancing short-term reactions with the broader direction suggested by economic fundamentals.

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Today’s market landscape is mixed, with the technology sector under pressure. Semiconductor companies Nvidia and Broadcom fell by 2.14% and 1.58%, while Oracle and Palantir dropped by 1.57% and 5.76%, respectively.

In contrast, the consumer defensive sector performed well, marked by a 1.37% gain for Walmart and 1.21% for Proctor & Gamble. The healthcare sector also showed stability, with UnitedHealth Group increasing by 0.89% and Eli Lilly up by 0.25%.

Investor sentiment remains cautious, focusing on defensive stocks amid economic uncertainties. Concerns about growth in high-valuation tech companies like Google and Apple, which declined by 0.24% and 0.47%, are evident.

To navigate this volatility, rebalancing portfolios towards consumer staples and healthcare is advised. Paying attention to upcoming economic reports and tech earnings may indicate potential rebounds, particularly in semiconductors. Diversification can help uncover undervalued opportunities in the tech sector for long-term growth.

This morning’s trading session highlights a shift in sector performance, with technology shares experiencing a sell-off while defensive industries find some support. Nvidia and Broadcom retreating by more than 1.5% suggests caution around chipmakers, particularly as broader concerns about valuations persist. Similar declines in Oracle and Palantir reinforce this, hinting at a broader pullback in growth-focused firms.

On the other hand, consumer staples and healthcare stocks are showing resilience. Companies like Walmart and Procter & Gamble gaining over 1% each underline confidence in areas of the market typically considered more stable during uncertainty. UnitedHealth Group and Eli Lilly edging higher supports this view, with healthcare continuing to serve as a refuge when broader market conditions become unstable.

Measured caution is shaping strategy, especially in how investors navigate a backdrop of uncertainty. Alphabet and Apple seeing declines, albeit modest ones, reflects ongoing scepticism towards some of the higher-valuation names in tech. While losses there remain contained, they add to a broader sentiment shift that could limit upside in the coming days. Adjusting positioning by favouring stocks tied to consumer essentials and medical services appears reasonable for those looking to weather volatility.

Looking ahead, attention will be on economic data releases and earnings reports from major technology firms. These could shape expectations for the months ahead, particularly in areas like semiconductors, where any sign of renewed strength could bring funds back in. A diversified approach may allow for exposure to opportunities in select areas of tech, especially where valuations have become more attractive after recent declines. For now, restraint and awareness of sector rotation seem essential in managing risk.

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The Chicago Purchasing Managers’ Index for February registered at 45.5, surpassing expectations of 40.6. This index indicates the economic health of the manufacturing sector, where readings below 50 suggest a contraction.

In related financial updates, the US dollar experienced mixed movements after the release of PCE inflation data for January. Additionally, gold prices dropped to below $2,840, marking a decline attributed to trade policy uncertainties and market conditions.

GBP/USD remains steady just above 1.2600, reflecting the current trends in the currency market. Overall, upcoming economic indicators, including US payrolls and the ECB rate meeting, will be closely monitored.

The Chicago Purchasing Managers’ Index (PMI) coming in at 45.5 instead of the expected 40.6 suggests that while the manufacturing sector is still struggling, it is not as weak as analysts had thought. A reading below 50 signals contraction, meaning there is still a slowdown, but the downturn might not be as sharp. This data ties into broader economic expectations, shaping how central banks and traders assess future policy and interest rate paths.

Meanwhile, the US dollar reacted in different ways across various markets following the release of January’s PCE inflation data. Since the Personal Consumption Expenditures (PCE) price index is closely watched by the Federal Reserve, any deviations from forecasts influence interest rate expectations. With uncertainty around inflation trends, currency traders are adjusting their positions, leading to inconsistent movements in the dollar.

Gold, often seen as a safe-haven asset, dropped below $2,840. This decline reflects current market sentiment, likely influenced by ongoing uncertainties regarding trade policies and fluctuating investor confidence. Traders have been weighing whether demand for gold will remain strong as economic conditions shift. Weak economic data can sometimes push investors towards gold, but without a clear direction, volatility remains high.

The British pound has remained stable, holding just above 1.2600 in its pairing with the US dollar. This suggests that market participants are waiting for more definitive economic signals before making adjustments. The steadiness could be short-lived, as the market will soon have to react to upcoming events that could trigger movement in the currency pair.

Looking ahead, all eyes will be on upcoming data releases and policy meetings. US payroll figures will be particularly relevant, given their impact on Federal Reserve policy expectations. Additionally, the European Central Bank’s (ECB) next rate decision will play a large role in shaping market sentiment. With these economic indicators on the horizon, traders will need to stay alert, as market movements could follow swiftly based on any surprises in the data.

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The Canadian dollar strengthened due to a robust GDP, which pushed the USDCAD pair lower. The USD/CAD broke above the key swing level at 1.4366 and surpassed the 38.2% retracement level at 1.4395, peaking at 1.4452 before sellers entered the market.

This peak entered a resistance zone between 1.4448 and 1.4471, an area of importance in recent trading. After volatility from the Trump Canada tariffs, the price fell below the previous consolidation zone, which ended at 1.4268 in February.

With the USD/CAD back in the consolidation zone, a retest of the 1.4471 upper boundary is possible. This level aligns with the 50% midpoint of February’s range, serving as a key pivot point for future price direction.

Key levels include support at the 38.2% retracement of 1.4395, which now acts as short-term support. A move below this level could lead to further support at 1.4366. Resistance at 1.4471 remains important, with a potential breakout indicating a more bullish trend.

Currently, buyers are dominant, but the consolidation zone remains a factor. Monitoring the 1.4395 level is important for short-term bias; sustaining above it suggests upward potential, while a break below could signal renewed downward pressure.

The Canadian dollar gained strength following stronger-than-expected GDP data, which in turn pressured the US dollar lower against it. This shift led to a temporary push higher in the exchange rate, but sellers quickly emerged as it reached a well-established resistance zone. The pair had initially pushed beyond a key level before stalling just above 1.4450.

This rejection occurred near a zone where past market activity has shown hesitation. The area between 1.4448 and 1.4471 has played an important role in previous sessions, acting as a ceiling where momentum tends to slow. The pullback that followed was amplified by recent market uncertainty, notably after the trade-related headlines involving tariffs. Once the price slipped below 1.4268, a level that had been a reference point earlier in the year, it re-entered familiar territory that had contained previous moves.

Since returning to this broader range, price movement has been largely dictated by buyer and seller behaviour within these boundaries. The possibility of another attempt towards 1.4471 remains intact, given that past resistance levels often attract renewed interest. This level is particularly notable as it coincides with the midpoint of February’s overall movement, giving it added weight as a potential turning point.

For those following price action, certain levels demand close attention. The 38.2% retracement at 1.4395, previously a resistance point, is now acting as a floor in the short term. A failure to hold above this figure increases the likelihood of a deeper move towards 1.4366. Conversely, if buyers maintain control and push beyond 1.4471, it could open the door to a clearer shift in momentum, potentially signalling further strength ahead.

For now, those positioned in the market continue to favour the upside, though the wider range remains a limitation until broken decisively. Holding above 1.4395 supports the idea of continued gains, but any sustained drop beneath it increases the risk of sellers regaining control. The coming days will likely revolve around how price reacts at this middle ground.

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USD/CAD has declined slightly following the US PCE inflation data for January and Canadian GDP data for Q4 and December. The US core PCE inflation rate decreased to 2.6% from 2.8% in December, while the Canadian economy grew at an annualised rate of 2.6%.

Despite the slight drop, the USD/CAD pair remains around 1.4430 during North American trading hours. The US core PCE inflation, which omits food and energy costs, revealed a monthly increase of 0.3%, up from 0.2% previously.

The Canadian GDP results were mixed, with a growth rate of 2.6%, surpassing the 2.2% growth in the previous quarter and higher than the expected 1.9%. In December, growth was reported at 0.2%, matching November’s decline, and below the anticipated 0.3%.

Overall, the outlook for the Canadian Dollar remains weak, especially after the announcement of 25% tariffs by US President Donald Trump on Canada and Mexico, set to take effect on March 4.

This minor weakening in the exchange rate suggests that traders are responding more to the inflation data from the United States than to Canada’s mixed GDP figures. A 0.3% monthly increase in core PCE inflation, while not drastic, indicates a steady rise in prices. That contributes to expectations regarding Federal Reserve policy, particularly in relation to interest rates.

The 2.6% annualised GDP growth in Canada, though better than estimates, attaches a few added layers to market sentiment. A stronger-than-expected expansion would usually support the local currency. However, December’s flat performance underlines a lack of consistent economic momentum. That could mean investors will be hesitant before assuming any broad strength in the Canadian Dollar.

Moreover, tariffs announced by Donald put additional pressure on market positioning. A 25% levy on Canadian and Mexican goods entering the United States will likely drive concerns over trade and economic performance in both countries. Even though there’s no immediate reaction in foreign exchange markets, it is something participants will need to factor in, particularly if trade tensions escalate further past March.

For traders involved in derivatives that hinge on the movement of this pair, it’s worth keeping a close watch on whether the upward trajectory in US inflation remains steady in the next release. If upcoming data reinforces higher price pressures, adjustments in forward-looking rate predictions may lead to fluctuations in the pair. We would also monitor how market sentiment evolves regarding Canadian GDP in the next couple of months. A weaker Canadian Dollar might persist if economic data remains inconsistent and trade concerns intensify.

At present, with the exchange rate hanging around 1.4430, it’s evident that neither side is making a decisive move. The next shifts will depend on whether traders place greater weight on inflation trends in the United States or on Canada’s economic trajectory. Given that previous GDP outcomes have been mixed, it will be just as necessary to examine domestic indicators in Canada, including employment data, before assuming any lasting movement in the pair.

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