May Canada Jobs Report & USDCAD Price Forecast

Bonds June 07, 2019 (1)

Following the all-time best 106.5K jobs added in April, the May Canada jobs report looks to cool off a bit – not a surprise – by posting a small contraction of -5.5K jobs, according to a Bloomberg News survey.

06/07 FRIDAY | 12:30 GMT | CAD Employment Change & Unemployment Rate MAY

But the overarching strength of the Canada jobs market since the start of the year, compounded by gains in recent months, means that a small topline contraction shouldn’t impact the unemployment rate, due on hold at 5.7%.

Canada Jobs Talking Points:

  • The May Canada jobs report detailing the employment change and unemployment rate is due on Friday, June 7 at 12:30 GMT.
  • According to Bloomberg news, surveys see modest weakness for the Canadian labor market, set to lose -5.5K jobs after adding an all-time best 106.5K jobs in April.
  • Retail traders have started to trim their net-short USDCAD positioning, giving us a mixed view.

Overnight Index Swaps: Bank of Canada Rate Expectations June 3, 2019 Table 1

boc

The strength seen in the Canadian labor market in recent months has helped keep rate cut expectations at bay. Two months ago, overnight index swaps were pricing in a 21% chance of a 25-bps rate cut by the end of September; now, those odds are higher at 33%. If there is going to be a 25-bps rate cut by the BOC in the next several months, overnight index swaps are favoring October 2019.