07:27 AM EDT, 07/02/2024 (MT Newswires) -- It's quiet on the data front Tuesday in Canada, with the S&P Global Manufacturing PMI out at 9:30 a.m. ET and auto sales for June expected later in the day, said Bank of Montreal (BMO).

Later in the week, the merchandise trade balance (Wednesday) looks to improve modestly to a C$500 million deficit from C$1.1 billion in the prior month, stated the bank. As it stands now, trade is on pace to add modestly to Q2 real gross domestic product (GDP) growth in Canada.

Friday brings a key employment report of the Labour Force Survey (LFS), and headline jobs are expected to post a 25,000 increase in June. BMO notes that Canadian employment trends have been surprisingly uniform, with the three, six and 12-month averages not far from 35,000.

June's print would be well below the roughly 50,000 trend growth in the labor force, pointed out the bank. Accordingly, the jobless rate looks to move up another tick to 6.3% (with a chance of a two-tick rise), which would be the highest since 2017 (excluding the pandemic). BMO will watch hours worked as well to get a better read on how Q2 GDP wrapped up after some sizeable year-to-date volatility.

With Canadian inflation melting away much quicker than in the United States and the Bank of Canada (BoC) easing ahead of the Federal Reserve, the Canadian dollar (CAD or loonie) lost more than 3% against the US dollar (USD) in the first half of the year, according to the bank. This isn't just a case of Canada lagging, as the trade-weighted dollar was up a firm 4.5% with a host of large central banks pivoting ahead of the Fed.

Government of Canada (GoC) bond yields backed up along the curve this year. While the BoC has begun easing, it has done so gingerly, leaving even two-year GoC yields slightly higher on the year.

While a follow-up rate cut is certainly possible later this month, BMO will need the data to cooperate to move forward with its September call.