There’s no top tier economic release in the European session today, so the action will likely be mostly in the US session as we get the Canadian labour market report and the US University of Michigan consumer sentiment survey.
The Canadian labour market report is expected to show 18K jobs added in April vs. -2.2K in March with the unemployment rate ticking higher to 6.2% vs. 6.1% prior. The last report missed expectations across the board with job losses and a big jump in the unemployment rate. There was also an increase in wage growth, which is what the BoC is more concerned about, although a looser labour market should depress wage gains going forward.
The market expects the central bank to deliver the first rate cut in June, although the probability for a July move is higher. A weak report will likely raise the probabilities of a rate cut in June while a strong one shouldn’t change much as the market will look forward to the Canadian CPI data on May 21st.
The University of Michigan consumer sentiment is expected to tick lower to 76.0 vs. 77.2 prior. Compared to the Conference Board consumer confidence report, which is more biased towards the labour market, the consumer sentiment survey is more weighted towards consumers’ finances. In fact, analysts believe that it’s a better predictor of consumer spending than the consumer confidence report, which is also why the expectations index in the survey is included in the Leading Economic Index (LEI). Do note that these indicators are more valuable and have a higher impact at turning points in the business cycle.
