The European session is basically empty on the data front today. The focus is on the US NFP report as it's going to be a market moving release, although the US CPI next week should have a bigger influence on the interest rate expectations given that the Fed is placing a great deal on further inflation progress to proceed with cuts.
13:30 GMT/08:30 ET - Canada Employment report
The Canadian Employment report is expected to show 25.0K jobs added in December vs. 50.5K in November and the Unemployment Rate to rise further to 6.9% vs. 6.8% prior. The last report saw a strong headline number, but the details were negative pretty much across the board.
CIBC cited large public sector job gains, highest unemployment rate since 2016 and private sector employment growth being less than half than labour force growth. In fact, the rise in unemployment since early 2023 has been mainly due to increased difficulty finding a job. Layoffs have not played a large role as it's usually the case in a recession.
As a reminder, the
BoC cut the policy rate by 50 bps as expected at the last decision but dropped the language indicating further rate cuts. This suggests that the central bank has reached the peak in its dovish stance, and it will now slow the pace of cuts conditional to the data. The market expects at least two more 25 bps cuts this year with a 71% probability of one coming already this month.
13:30 GMT/08:30 ET - US December Non-Farm Payrolls
The US NFP report is expected to show 160K jobs added in December vs. 227K in November and the Unemployment Rate to remain unchanged at 4.2%. The Average Hourly Earnings Y/Y is expected at 4.0% vs. 4.0% prior, while the M/M measure is seen at 0.3% vs. 0.4% prior.
The Fed projected the unemployment rate to average 4.3% this year. They will likely tolerate overshoots of 10 or 20 bps if inflation doesn’t cooperate. Nonetheless, the focus switched back to inflation, so the next CPI report is going to have a bigger influence than the NFP report (barring big deviations in the data).
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
