What are the main events for today?

Today is an important day for financial markets as we will get to see the latest US NFP report. The Fed is now more focused on the labour market than inflation, and an unexpected deterioration might force their hand to cut rates.

The European session is pretty empty on the data front as we will just get the Eurozone Retail Sales data which is rarely a market moving release.

12:30 GMT/08:30 ET – US June NFP

The US NFP is expected to
show 190K jobs added in June vs. 272K in May
and the Unemployment Rate to remain unchanged at 4.0%. The Average Hourly
Earnings Y/Y is expected at 3.9% vs. 4.1% prior, while the M/M measure is seen at 0.3% vs. 0.4% prior. The Fed at the moment is
very focused on the labour market as they fear a quick deterioration.

As a reminder, they
forecasted the unemployment rate to average 4% in 2024, so I can see them
panicking a bit and deliver a rate cut if unemployment rises to 4.2% in the
next couple of months. For now, the data suggests that the labour market is
rebalancing via less hires than more layoffs and overall, there are no material
signs of deterioration.

12:30 GMT/08:30 ET – Canada June Labour Market report

The Canadian labour market
report is expected to show 22.5K jobs added in June vs. 26.7K in May and the Unemployment
Rate to tick higher again to 6.3% vs. 6.2% prior. The last
report surprised to the upside although we got another uptick in the unemployment
rate. The key part was wage growth jumping to 5.1% vs. 4.7% prior, which is
what the BoC is most focused on.

As a reminder, the last
week the Canadian
CPI surprised to the upside, with the underlying inflation measures rising
but remaining within the 1-3% target band. This made the market to pare back
rate cuts expectations with the probabilities now standing around 53% for no change. We will
get another inflation report before the next BoC policy decision, but if we see
another jump in wage growth, then the central bank will likely need very good
CPI figures to deliver a rate cut in July.

Central bank speakers:

• 09:40 GMT – Fed’s Williams (neutral – voter)
• 12:15 GMT/08:15 ET – ECB’s Elderson (neutral – voter)
• 17:15 GMT/13:15 ET – ECB’s Lagarde (neutral – voter)

This article was written by Giuseppe Dellamotta at www.forexlive.com.