Weak employment data increase chances of Bank of Canada rate cut in June

As reported by Bloomberg, employment in the private sector of Canada fell by almost 75,000 jobs over the past two months. According to Statistics Canada, in April, the country recorded an unexpected spike in the unemployment rate to 6.9%. The manufacturing sector suffered the greatest losses.

The agency attributes the negative dynamics to the introduction of US tariffs on Canadian imports. Against this background, traders in overnight swaps estimate the probability of a rate cut by the Bank of Canada by a quarter of a percentage point in June at about 60%.

Meanwhile, the regulator's representatives said earlier that keeping the rate unchanged at 2.75% in April was a reasonable choice. This will provide the regulator with the opportunity to assess the impact of the US trade policy on the country's economy and to monitor the further steps of Donald Trump's administration.

As Bloomberg notes, from this perspective, the outlook has improved, with Trump signing a trade agreement with the UK last week and tariff talks with China starting over the weekend. Last Tuesday, Prime Minister Mark Carney had a meeting with Trump, signaling the upcoming start of talks between the US and Canada.