Canada June Jobs Report in Focus: Possible Unemployment Rate Rise, BoC Policy in the Spotlight

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3570-1.3810

Euro                 1.5880-1.6130

Sterling            1.8370-1.8630

WTI Oil (opening level) $67.30

The CAD/USD is opening at 1.3689 ( 0.7304 )

Canada releases June jobs data today. Consensus is for no change in employment, while the unemployment rate is expected to edge up from 7.0% to 7.1%. Recent government spending cuts point to an increased risk of job losses, and markets continue to underprice the probability of a September rate cut by the Bank of Canada

A particularly weak jobs report could even spark speculation of a move as early as the end of July. It may be too soon to position for CAD weakness ahead of any clarity on the US-Canada trade deal, but it is likely to see the loonie as broadly unattractive

Headlines

·    Trump threatened a 35% tariff on some Canadian goods, to take effect from 1 August, suggesting he is intent on ratcheting up his trade war with Canada, while the EU will be next to receive their letter. He also raised the prospect of increasing levies on most other countries by 15% or 20%.

·    US initial jobless claims dropped by 5,000 to 227,000 in early July, contrary to expectations of a rise to 235,000, marking a fourth consecutive decline. Despite this, ongoing claims increased by 10,000 to 1,965,000, the highest since 2021, raising concerns about slowing hiring.

Key Points

·    Equities: New highs in US; tariffs escalate; tech and travel lead; EU deal hopes lift Europe

·    Volatility: VIX near March lows; short-term vols fade; SPX priced for small moves

·    Digital assets: Bitcoin +1.74%; ETH breaks $3K; ETF inflows surge; shorts liquidated

·    Fixed Income: US Treasuries steady after government sales

·    Currencies: Tariff jitters supporting a small weekly USD gain

·    Commodities: Weekly copper and silver gains offsetting broad agriculture losses

·    Macro events: UK trade and production data, Canada unemployment rate