CANADA DATA: Employment Gains To Slow In June Labour Force Survey (1/2)
Jul-09 20:05
Canada's Labour Force Survey is expected to show continued but substantially slower job gains in June after a 17-month high in May, with consensus for a 10k employment increase (87.8k prior). The unemployment rate is seen steady at 6.6%.
- May's extraordinarily strong report, in which job gains beat expectations for the first time so far in 2026, assuaged fears of more substantial softening in the Canadian economy than had been expected in the first half of the year. A gain in line with consensus in June would reduce net job losses in 2026 so far to 15k, having been down a cumulative 112k through April. June saw a 154k rise in full-time employment (most since Feb 2022) with the best rise in goods-producing sectors in 3 years (39k) with Services seeing the best month (49k) since October 2025.
- The steady unemployment rate (6.56% unrounded in May was a 4-month low) amid soft job growth is seen to be accompanied by a steady participation rate (65.0% in both April and May).
- Proxy data were mixed in June. The Ivey PMI's employment gauge softened to a still-elevated 53.6 from 54.3 and the Canadian Federation of Independent Business (CFIB)'s net staffing intentions turned negative for the first time this year; but the S&P Global Composite PMI report noted "employment numbers rose slightly overall and for the second time in the past three months". Additionally, the Q2 BOC Business Outlook Survey (BOS) showed employment intentions were weaker than the historical average, with some slack in evidence as the overall intensity of labor shortages abated.
- June is a strong month for hiring on a non-seasonally-adjusted basis though the seasonal factors for the month have looked fairly middling as it goes in recent years. There will also be some attention on World Cup-related gains in the Services categories (eg Accommodation) though this effect appeared to be subdued at best in the US's June nonfarm payrolls.
- The strong May figure means it's sensible to expect some mean reversion. But we caution that the extreme volatility in recent readings (Jan: -25k, Feb -84k, Mar: +14k, Apr: -18k) makes it difficult to draw firm conclusions from any single report.
- And the bigger picture is that chronic labor supply issues persist amid various headwinds including reduced immigration: in June the population was up just 0.7% Y/Y with the labour force up 0.3% (both post-2021 lows), while employment was up 0.7%.
- This is the last major release before the BOC's decision announcement on Wednesday July 15. At the June meeting, the statement was fairly neutral on the labor market even after May's blowout employment report, which was fair enough given that as noted "employment in Canada is little changed since the start of the year".
- Overall the flat growth in employment over the last year as a whole is indicative of labor market stability, making it for now a relatively neutral factor for monetary policy even as core inflation looks likely to have turned a corner higher after a series of below-expected readings.
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USDCAD TECHS: Sights On Key Resistance
Jun-09 20:00
- RES 4: 1.4015 High Dec 2 2025
- RES 3: 1.3972 1.0% 10-dma envelope
- RES 2: 1.3967 High Mar 31 and a key M/T resistance
- RES 1: 1.3961 High Jun 8
- PRICE: 1.3956 @ 16:55 BST Jun 9
- SUP 1: 1.3867 Low Jun 5
- SUP 2: 1.3822 20-day EMA
- SUP 3: 1.3772 50-day EMA
- SUP 4: 1.3731 Low May 20
The current uptrend in USDCAD remains intact and recent strong gains have reinforced this condition. The move higher has confirmed a resumption of the bull cycle that started on May 1. This paves the way for an extension towards 1.3967, the Mar 31 high and the next key resistance. Initial firm support to watch lies at 1.3772, the 50-day EMA. A clear break of this average is required to signal a possible reversal.
US INFLATION: Tech-Led Inflation May Have Slowed After Shortage-Driven Boom
Jun-09 19:41
Semiconductor Shortages Remain But Software Inflation Could Have Slowed (More A Core PCE Story)
- Within the CPI core goods details, computer software & accessories remains a notable small category to watch after an extremely strong run owing to semiconductor and other tech-related shortages.
- It’s still hard to get a sense of what’s expected here although we judge it’s for a softer increase than the 5.0% M/M in April (for a cumulative 26% increase between Nov-Apr).
- The Adobe DPI saw another strong increase but notably less so than the prior month, Citi write “We expect a much more modest increase this month and for this component to move sideways to lower later in the year” and JPM write “We expect that price increases continued there. However, price histories for some of the bestselling models on Amazon.com suggest that the rate of increase slowed substantially in comparison to earlier months.”
- This category needs less of an introduction now but remember that it has a weight of only 0.04% in core CPI vs 1.2% for core PCE, having added 0.06pp to core PCE alone in April.
US TSYS: Tension Flares, Trump Warns Iran After Chopper Downing, CPI up Next
Jun-09 19:40
- Treasuries look to finish near midsession highs after some two-way geo-pol related volatility Tuesday. Sky News Arabia reported that the draft agreement has been sent to the American side for its review, with confirmation that the draft is preliminarily acceptable to the American administration.
- However, crude bounced off session lows after President Trump posted on Truth Social to say he would respond to the Iranian downing of a US helicopter, threatening to raise tensions. While it may contradict Trump’s statements earlier of progress to a deal, the US may think it can take some form of limited action without completely derailing the talks.
- Weekly ADP private employment increased an average 29.0k per week in the four weeks to May 23, slightly moderating from 30.5k in the prior week (a new value for the weekly series but one that chimed with the monthly series released instead that week) and an unrevised 35.75k the week before that.
- Focus on CPI tomorrow morning, inflation expected to moderate to a still elevated pace in May, with MNI unrounded consensus pointing to 0.51% M/M for headline CPI and 0.23% M/M for core CPI. It should see headline CPI jump further to 4.2% Y/Y with a risk of 4.3% (either strongest since Apr 2023) whilst core CPI would see a more modest acceleration to 2.8-2.9% Y/Y (strongest since Sep 2025).
- TYU6 trades +5.5 after the bell to 109-06.5 (108-27.5 low). Resistance to watch is 110-04, the 50-day EMA. The bear trigger lies at 108-08+, the May 19 low. Clearance of this level would confirm a resumption of the downtrend.
- Today's 3Y Note sale (91282CQV6) tailed slightly: 4.192% high yield vs. 4.190% WI; 2.64x bid-to-cover over the 5-auction average of 2.616x.
