Canada: Small business sentiment rebounds
According to the February 2026 CFIB Business Barometer, Canadian small business sentiment has experienced a significant rebound, with the long-term optimism index surging by 5.4 points to reach 64.8. This recovery, following a period of historically low levels shown in the accompanying chart, places both long-term and short-term (61.2) outlooks well above their historical averages. The improved morale is reflected in a second consecutive month of positive staffing intentions, with 19% of employers planning to hire versus 13% expecting layoffs.
Despite this surge in confidence, the report highlights persistent structural challenges. While confidence rose in most provinces and sectors, business owners remain cautious due to insufficient demand, which is cited by 49% of SMEs as a primary barrier to growth. Furthermore, a “triple threat” of cost pressures, wages, insurance, and taxes/regulations, all weigh heavily at 58% each. Qualitative feedback from owners indicates that while the environment is stabilizing, high operating costs and geopolitical uncertainties (specifically regarding trade relations with the US) are deterring capital investment and equipment upgrades, forcing many to maintain aging infrastructure to protect thin margins.
In FX, as it’s been usual over the last year, the Canadian dollar has largely followed US Dollar’s cue. Starting from a weekly low of 97.3, the US DXY climbed steadily to a peak of 98.0 yesterday, signaling broad-based dollar demand. This move pushed the USD/CAD higher, lifting the pair from its weekly low of 1.3649 to an intraday high of 1.3725 on February 24th. However, even as the broader DXY pushed for new highs on the 25th, USD/CAD began to lose steam, settling into a choppier range around 1.3684 as the Loonie showed some relative resilience.
This mid-week stall makes more sense when you look at the daily chart. While the intraday momentum felt bullish early on, the pair is currently hitting a congested resistance zone that has served as key support/resistance level over the last year. On a daily basis, USD/CAD is fighting through a cluster of moving averages; while it has managed to peek above its 20-day SMA, it remains pinned below the more significant 200-day SMA near the 1.38 mark. With the RSI hovering in neutral territory, the market seems to be acknowledging that while the US dollar is holding up well on a light macro data week, it doesn’t yet have the fundamental “oomph” to break through the heavy resistance sitting between 1.38 and 1.39. Tomorrow, markets will pay close attention to Q4 ’25 GDP data, as economists expect a quarterly annualized decline of -0.2%
EUR: Steady now, stronger later?
The euro‑area’s €800 billion fiscal package — including Germany’s €500 billion contribution — was a major bullish EUR catalyst last year, even though its growth impact was always expected to show up from 2H26 onwards. Still, early signs of that support are starting to appear. Germany’s Ifo index rose to 88.6 in February, its strongest reading since last summer, with both the current‑assessment and expectations components improving.
The broader picture is that fiscal spending, particularly in defence and infrastructure, is beginning to filter through via firmer order books and lower inventories. If this momentum builds, it could offer the euro some structural support by helping stabilise Germany’s industrial base and easing concerns that Europe is stuck in a low‑growth pattern.
At the same time, as outlined in the USD section above, the period of clear US outperformance may be behind us. Global investors are increasingly aware of how heavily their portfolios are tilted toward US assets, creating scope for further USD diversification. That process takes time, but it still leaves room for EUR/USD to push toward $1.22 before year‑end.
Near term, though, the euro faces headwinds. Expectations for Fed rate cuts have been pared back, and the risk of higher oil prices amid geopolitical tensions is another drag. Technically, EUR/USD has held its 50‑day moving average this week, but the RSI has flattened and the 21‑day moving average has rolled over — both signs that the recent uptrend may be losing momentum.
MXN: Peso holds firm on Banxico’s pause
On February 5, Banxico’s Governing Board hit the “pause” button on rate cuts, keeping the benchmark interest rate steady at 7.00%. The decision was a unanimous move to wait and see how new import tariffs and tax changes (IEPS) affect the economy. While the board is keeping an eye on a bit of economic weakness, they felt it was smarter to stay put and evaluate the current inflationary landscape before making another move.
The meeting minutes reveal a bit of a “wait-and-see” approach, with most members viewing recent price hikes as temporary hiccups rather than a long-term trend. However, at least one member pointed out that inflation hasn’t really slowed down over the past year, with core prices actually creeping up. This cautious, “hawkish” tone suggests that the bank is prepared to be patient, perhaps even stubborn, about keeping rates where they are until they see real progress.
On the FX side, the Mexican peso has been a star performer, gaining about 13% against the dollar through 2025. This year alone, the Peso has gained close to 5% against the USD. The board credits this to Mexico’s solid economic fundamentals, high real yields combined with a growth forecast that targets 2.3% by 2027. All together make the currency one of the leaders of the emerging market carry trade. Investors are betting that a recovering global manufacturing cycle and artificial intelligence related investment in the US will keep the MXN buoyed regardless of short-term consolidation.
Market snapshot
Table: Currency trends, trading ranges & technical indicators
Key global risk events
Calendar: February 23 – 27
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
