On Friday, the Canadian employment report will be released. According to analysts from Wells Fargo, the labor market it tight at present, but they see a low probability of a rate hike in September.
Key Quotes:
“Canadian employment rose by 31.8K workers in June. Because the population of the United States is about ten times as large as Canada’s, the rise in Canadian non-farm payrolls in June is equivalent to a very strong gain of roughly 300K workers in the United States. Canadian employment is inherently volatile on a monthly basis, so the unemployment rate, which is not quite as volatile, may be a better way to measure the underlying state of the Canadian labor market. In that regard, the current rate of 6.0 percent is near the lowest rate in more than 40 years. In short, the Canadian labor market is tight at present.”
“The Bank of Canada (BoC) raised its main policy rate 25 bps at its last policy meeting on July 11. In our view, there is a low probability that the BoC will hike rates again at its next policy meeting in September, but we forecast that it will pull the trigger again at one of its two meetings in the fourth quarter.”
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