07:30 AM EDT, 05/05/2025 (MT Newswires) -- Investors will get the merchandise trade report for March on Tuesday, which could be an interesting one, said Bank of Montreal (BMO).

The bank note that, with Canadian trade subject to United States tariffs and countertariffs to/from its largest trading partner, it's expecting the deficit to deepen to $2.0 billion in March.

Friday will bring the April employment report (LFS). BMO stated that the tariff chaos of early April, combined with tariffs already in place on steel/aluminum and non-USMCA products, likely weighed on the Canadian economy and labor market. The uncertainty alone is enough to prompt many businesses to pause hiring, with some downsizing in tariff-hit sectors.

However, the headline figure will probably be a bit misleading as the federal election hiring will provide a solid lift -- the bank is estimating around a 25,000 boost. Unfortunately, even with that one-off positive, the unemployment rate is poised to rise another notch to 6.8%. The latter would be more indicative of the direction of the labor market, especially with labor force growth decelerating.

BMO will watch hours worked, as that could provide a glimpse of how the broader economy fared in the month. Lastly, the slowing in wage growth could stall for a month as April 2024 was soft.

Investors will also hear from the Bank of Canada when it publishes the Financial Stability Report and Financial System Survey on Thursday.

Last week's mixed bag of monthly gross domestic product data for February (-0.2% month over month) and March (+0.1% initial flash) left BMO's economic outlook and rate outlook unchanged.

The federal election result was also very much in line with polling trends, and the bank suspects that a strong minority mandate for the Liberals will allow the fiscal stimulus detailed in their election platform to begin rolling out soon. Prime Minister Mark Carney will announce his cabinet during the May 12 week, with parliament expected to resume the last week of May.

The Canadian dollar (CAD or loonie) continued to gradually firm despite weakness in oil prices -- the currency starts the week at $1.380/USD (72.5 US cents), aded BMO.