What are the main events for today? | Forexlive

The European session is basically empty on the data front today. The focus is on the US NFP report as it’s going to be a market moving release, although the US CPI next week should have a bigger influence on the interest rate expectations given that the Fed is placing a great deal on further inflation progress to proceed with cuts.

13:30 GMT/08:30 ET – Canada Employment report

The Canadian
Employment report is expected to show 25.0K jobs added in December vs. 50.5K in
November and the Unemployment Rate to rise further to 6.9% vs. 6.8% prior. The
last report saw a strong headline number, but the details were negative pretty
much across the board.

CIBC
cited large public sector job gains, highest unemployment rate since
2016 and
private sector employment growth being less than half than labour force
growth. In fact, the rise in unemployment since early 2023 has been
mainly due to
increased difficulty finding a job. Layoffs have not played a large
role as it’s usually the case in a recession.

As a reminder, the
BoC cut the policy rate by 50 bps as expected at the last decision but
dropped the language indicating further rate cuts. This suggests that the
central bank has reached the peak in its dovish stance, and it will now slow
the pace of cuts conditional to the data. The market expects at least two more
25 bps cuts this year with a 71% probability of one coming already this month.

13:30 GMT/08:30 ET – US December Non-Farm Payrolls

The US NFP report
is expected to show 160K jobs added in December vs. 227K in November and the
Unemployment Rate to remain unchanged at 4.2%. The Average Hourly Earnings Y/Y
is expected at 4.0% vs. 4.0% prior, while the M/M measure is seen at 0.3% vs.
0.4% prior.

The Fed projected
the unemployment rate to average 4.3% this year. They will likely tolerate
overshoots of 10 or 20 bps if inflation doesn’t cooperate. Nonetheless, the
focus switched back to inflation, so the next CPI report is going to have a
bigger influence than the NFP report (barring big deviations in the data).