**As seen in Risk In The Week report 05/05/24, subscribe at cablefxm.co.uk/reports
The March jobs report showed the Canadian economy
surprisingly losing 2.2K jobs, the consensus estimate had
seen an addition of 25.0K, and the prior month recorded an
increase of 40.7K. Another data point suggesting softness in
the labour market was the uptick in the jobless rate to 6.1%,
this was the highest reading since January 2022 and
surprised economists' expectations of 5.9%. March's state
of the Canadian labour market increased the odds of a BoC
shift in policy, they would later confirm disinflation and
unemployment pointing to rate cuts ahead. Market implied
policy curve pencils 92bps of easing in the 1y tenor,
however, pricing is 10bps above where it was back in early
February.
Economists at BMO said that Canadian population growth is
unlikely to slow in the near term, according to their
calculations, it would take +45K jobs/month to keep the
jobless rate steady. BMO does not expect a meaningful
improvement in job gains this month and they see the
unemployment rate rising to 6.2% in April. TD Securities said
markets are slightly favouring a June BoC rate cut, they
added that the central bank continues to acknowledge
progress towards its price mandate. TD warned of a
widening in the U.S.-CA rate differentials into 2H 2024.
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