On Wednesday, New Zealand will release its quarterly employment change and unemployment rate and later in the day we'll have the highlight of the week—the FOMC monetary policy announcement.
Remarks from several FOMC members are expected throughout the week.
Last month’s drop was one of the largest in nine months, driven by a significant decline in the employment component and a slowdown in both domestic and international orders, according to analysts from Wells Fargo. Although business activity remained relatively resilient, the overall picture is less encouraging, and further deterioration in business confidence could weigh heavily on the sector.
At this week's FOMC meeting, the Fed is widely expected to keep rates on hold despite the latest economic data, particularly the soft Q1 GDP figures.
The Fed will likely adopt a “wait and see” stance as the Committee evaluates the current economic landscape. There is no doubt that tariffs complicate the Fed’s mandate, exerting pressure on both inflation and employment.
At this week's meeting, the BoE is expected to deliver a 25 bps rate cut, lowering the policy rate to 4.25%. This move would continue the easing cycle of quarterly cuts that began in mid-2024.
A significantly weaker growth forecast or inflation projections well below the 2% target would likely be required to shift expectations toward a faster pace of rate cuts.
Canadian labor market conditions have started to show signs of strain following the imposition of U.S. tariffs in March. Employment declined, and a second consecutive monthly drop in the participation rate was recorded, with the unemployment rate rising to 6.7%.
Although the labor market hasn’t collapsed—unemployment remains below the 6.9% peak recorded late last year—ongoing softness in hiring demand, as indicated by declining job vacancies, suggests further deterioration ahead. RBC analysts expect the unemployment rate to gradually rise through the second half of 2025.
This article was written by Gina Constantin at www.forexlive.com. Read More Details
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