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Daily Roundup of Key US Economic Data for May 8

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-- The April employment report was mixed, with payrolls growth stronger than expected the unemployment rate unchanged, and hourly earnings growth slower than expected.

Nonfarm payrolls rose by 115,000 in April after an upwardly-revised 185,000 gain in March and a downwardly revised 156,000 decline in February. Private payrolls rose by 123,000, also above expectations and following a 190,000 gain in March.

Health care and social assistance jobs rose by 53,900 in April while transportation and warehousing jobs rose by 30,300 and retail trade jobs advanced by 21,800.

The unemployment rate remained at 4.3% in March, but the details suggested a deterioration in the employment picture. The labor force contracted by 92,000 as labor force participation declined. Household employment fell by 226,000 while the number of unemployed rose by 134,000.

Average hourly earnings were up 0.2% in April, the same as in March, but lifting the year-over-year rate to 3.6% from 3.4%.

The preliminary Michigan Sentiment index fell to 48.2 in May from 49.8 in April.

According to Michigan, consumers' assessment of current conditions deteriorated in May due to continued concerns about the Middle East conflict, but the near-term outlook improved on lower inflation expectations.

March wholesale inventories were revised lower to a 1.3% increase from a 1.4% gain in the advance reading.

At the same time, wholesale sales increased by 2.8%, faster than expected.

Combined with already released data for the retail and factory levels of distribution, business inventories are on track for a 0.9% gain while business sales are tracking up 2.1%. Both will be released on May 14, when updated retail inventory and sales estimates will be released.

The Q2 GDPnow initial estimate from the St. Louis Fed is for a 1.980% gain.

The Q2 GDP nowcast estimate from the Atlanta Fed is for a 3.7% gain, unrevised from the previous estimate.

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USD/CAD Likely To Remain "Trapped" In a Range-bound Environment In Coming Months, RBC Says

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International

Job Reports Not Enough To Take USD-CAD Out Of Its Range Bound Environment, RBC says

A softer Canadian jobs report today saw the unemployment rate up to 6.9% and resulted in a rates rally and curve steepening, RBC Capital Markets said in its latest CAD Weekly Soundbites note. But, the bank added, when that report is combined with the US labor report, that beat forecasts, it wasn't enough to take USD/CAD out of its range-bound environment.Canadian data also reinforced the Canadian dollar's underperformance versus its G10 commodity and higher-yielding peers over the past month, RBC said.On the Canadian economy, RBC noted the April jobs report showed a 0.2 percentage-point increase in the unemployment rate to 6.9%, with weakness evident in goods sectors, trade and transport/warehousing, though private-paid employment and total hours worked were little changed in the month.Looking ahead, RBC said next week will not feature key Canadian data releases, although there will be a number of second-tier reports including housing market data, wholesale trade on Thursday and manufacturing sales on Friday. "The softening labour market YTD has not translated to the product market, where Q1 GDP is tracking above-potential including the March nowcast," it added.The bank added that investors will also watch inflation data in Norway, New Zealand inflation expectations, U.S. producer prices, second-quarter GDP revisions in the euro area, U.K. first-quarter GDP, U.S. retail sales, and Japanese producer prices. RBC also noted that the Bank of Japan and Riksbank will release minutes from their latest meetings, while Norges Bank's Financial Stability Report is due Tuesday.On rates, RBC said the Bank of Canada's expected hold last week was delivered, although "the balance of changes tilted hawkish." The bank noted GDP growth is tracking in the 1.5%-2% range in the first quarter, which would result in a lessening of excess slack in the economy if realized in the full expenditure breakdown. RBC added improved labour market outcomes are expected as part of slack reduction over the year. "We maintain our long-held view: base case is the BoC on hold in 2026, with hikes in 2027, but the chance of H2 hikes far exceeds the chance of a cut."Meanwhile, RBC noted Government of Canada bonds outperformed their U.S. Treasury counterparts following the weaker jobs report, with the Canada/U.S. 10-year spread tightening 5 basis points to at -89 basis points from last Friday.On technicals, RBC said after yields failed to close above the key double top at 3.62%, the move back below a trendline dating to late February, now at 3.54%, "eases some of the topside risks.""This opens 3.43% and 3.39% next on the downside," RBC added.

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International

USD's Weekly Coppock Curve "Still Nominally In An Uptrend" Vs CAD, "But It Is Peaking", says Rosenberg Research

Walter Murphy over at Rosenberg Research noted in a last comment in early April the U.S. dollar's weekly Coppock Curve was in a confirmed uptrend against the Canadian dollar and was on pace to remain constructive into the latter part of May. Five weeks on, the indicator is still nominally in an uptrend, but it is peaking, he said. More importantly, the greenback is currently a good deal below its early-April levels against the Canadian currency, "despite those seemingly favorable momentum conditions", he added.According to Murphy, April's promise was "overwhelmed" by the combination of the 2025-2026 resistance trendline and the lower reaches of C$1.402-C$1.417 chart resistance area. "Those two elements have clearly proven their mettle (again)," Murphy said.Murphy noted the greenback is currently in the middle of the C$1.375-C$1.340 support range, while the resistance line is now at C$1.385 and declining by C$0.001 per week. "At that rate, it will not challenge the upper portion of the support band until early July," Murphy said.The peaking Coppock indicator will likely enter a confirmed downtrend by the end of May, according to Murphy. However, he said, the resulting bearish bias may only continue for a relatively few weeks, "perhaps into late June or early July."Under those conditions, Murphy said there may not be enough time for the U.S. dollar to do much more than test the lower boundaries of the C$1.375-C$1.340 support area.He added the year-to-date lows in the C$1.353-C$1.348 range "would be expected to provide some intervening support."

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