Summary:

• US labour market report is expected to bring another solid increase in employment 
• Canadian jobs report could turn out to be critical before the BoC meeting next week
• Oil traders should watch a weekly Baker Hughes release

Friday is all about employment reports from the US as well as Canadian economies. The former will be keenly observed in terms of wage growth, while expectations regarding the release from Canada is to not disappoint as traders still bet on a rate hike from the Bank of Canada next week. At the end of the day we will get a weekly release from the Baker Hughes regarding active oil rigs.

1:30 pm BST – US labour market report: Expectations with regard to today’s release do not seem to be overstated, and the consensus suggests that the US economy added 195k new jobs last month in the non-farm sector compared to 223k observed in May. The unemployment rate is anticipated to stay at 3.8% while the labour force participation rate ought to hold onto 62.7%. As usual the wage growth data should draw the most of attention as market participants keep looking for any signs of mounting inflationary pressures which could continue justifying further rate increases from the Federal Reserve. On the flip side, taking into account the current stance shared by the Committee one may suspect that even as wage growth does not accelerate beyond 3% in annual terms, the Fed is highly unlikely to stop lifting rates, and only a more notable financial havoc would derail the Fed’s plan. Annual wage growth is estimated at 2.8%.

1:30 pm BST – Canadian jobs report: Labour market reports from the Canadian economy are much more volatile in comparison to those from the neighbouring US. The most recent release resulted in a disappointment, hence this time one could count on a positive surprise. The June’s report seems to be especially important given that the BoC will meet next week and, barring a catastrophic release today, a rate hike should be delivered (the likelihood stays at around 80% this morning). A net change in employment is forecast to show +20k new jobs, the jobless rate should stay at 5.8% whereas wage growth is forecast to lower to 3.7% from 3.9% yoy (notice that base effects ought to become much less supportive of higher growth). On top of that, Ivey PMI will be released at 3:00 pm BST.

6:00 pm BST – Baker Hughes release: Oil has been in the spotlight this week, and the final point being worth taking into account will come from the Baker Hughes. Given the latest steady increase in prices US drillers are still expected to add new rigs, hence it’s likely to this afternoon we will see higher number than 862 seen last week.

The USDCAD drew a bearish engulfing last week, and if today’s candlestick closes below 1.31 it could confirm that that pair may embark on a deeper pullback. Source: xStation5