CAD: Jobs report the last big data watch ahead of the July BoC meeting - ING

Ahead of next week’s all-important July BoC meeting – where a rate hike is now looking like a formality – today’s Canadian jobs report will be watched closely for any last-minute sting in the tail, according to the research team at ING.

Key Quotes

“We note that most of the BoC’s recent optimism stems from the strong employment gains in 2017 (+140k in total), which in theory points to a much tighter labour market. The fact that this hasn’t generated any durable underlying inflationary pressures in the economy seems irrelevant to the BoC at this stage, who seem to be banking on the Phillips curve to come good at some point in the future. Even if policy rates are increased next week, we think expectations for ~100bp worth of tightening over a 2Y horizon seem excessive at this stage. Risks are that we get a dovish hike next week that is CAD negative.”