Today, Statistics Canada released weaker-than-expected employment data. Canada shed 1,400 jobs in June, following a 26,700 increase in May. Economists had predicted stronger numbers. The jobless rate rose to 6.4%, the highest since 2017 (excluding the pandemic).

Full-time jobs declined while part-time work increased slightly. Job losses were seen in transportation, warehousing, information, recreation, and retail trade. Regionally, Quebec saw job decreases, while New Brunswick and Newfoundland and Labrador saw gains.

Immigration has boosted labor force growth and consumer spending, delaying a recession. However, population growth means anything short of a 45k employment gain will increase the jobless rate.

The Bank of Canada is expected to cut interest rates by 175 basis points through next year, with the next decision on July 24, dependent on June inflation data released on July 16.

Average hourly wages increased 5.4% year-over-year in June, up from 5.1% in May. Despite this, rising unemployment is expected to curb wage inflation.
🇺🇸 Simultaneously, US payroll data showed moderated hiring, increasing the likelihood of Federal Reserve rate cuts. The difference between US and Canadian interest rates often drives loonie fluctuations.

Traders now see a higher chance of BoC rate cuts in July, up to two-thirds from 55% before the data release.