In the European session, we'll just have a few low tier releases like industrial production for Germany and France and the Eurozone retail sales. None of the data will impact the current market pricing.

In the American session, we have the Canadian Employment data and the US NFP report. The Canadian Employment data is expected at -12.5 vs 7.4K prior and the unemployment rate to tick higher to 7.0% vs 6.9% prior.

The BoC this week held interest rates unchanged as they wait for more information on trade negotiations and inflation, which continued to increase at a steady pace since late 2024. The market is pricing 31 bps of easing by year end with the next cut expected in the final quarter of 2025.

The US non-farm payrolls report is expected to show 130K jobs added in May vs 177K in April and the unemployment rate to hold steady at 4.2%. The Average Hourly Earnings Y/Y is expected at 4.2% vs 4.2% prior, while the M/M figure is seen at 0.3% vs 0.2% prior.

The other labour market data showed some easing in hiring which is not surprising given the tariffs saga. So there might be some softness in the data but not enough to force the Fed to cut rates anytime soon. The market is pricing 54 bps of easing by year-end with the first cut coming in September.

It goes without saying that if the data starts to pick up, the Fed will have much less incentive to cut rates and the market will likely scale back the two cuts that it's pricing in at the moment.

Source: Forex Live