ADP Employment Change for May increased 152k, below the 175k estimate. This is the second piece of soft labor data this week after Monday’s JOLTS (U.S. job openings by industry) hit a 3-year low. Keeping the focus on the U.S. labor market, we will see Weekly Jobless Claims tomorrow (220k estimate). Friday’s release of U.S. Change in Nonfarm Payrolls data for May will be the most authoritative view on labor conditions. Payrolls are estimated +185k vs. the +175k previous. The lowest payrolls gain since the COVID rebound was 136k, so any result below that could be THE signal for changing labor conditions.
The Bank of Canada cut its policy rate by 25 basis points today as expected, going from 5.00% to 4.75%. Furthermore, the BoC signaled that it was ‘reasonable to expect’ more cuts. Odds of a cut at the BoC’s July meeting now stands at 52%, and 50.4% at the September meeting. The Bank of Canada is the first G-7 country to cut rates. The ECB is expected to deliver its first cut tomorrow.
The dollar is higher today, lifting the U.S. Dollar Index by 0.27%. The dollar’s primary gain is vs. JPY, +0.83%, reversing yesterday’s drop and confirming USDJPY short-term support at 155.00. Other gains for the dollar: +0.35% vs. CHF and +0.26% vs. CAD.
