The Bank of Canada interest rate decision and employment data to be released this week, with the market widely expecting no change.

(1) The Bank of Canada will announce its interest rate decision on Wednesday. The market widely expects the overnight rate to remain unchanged at 2.25%. Investors will focus on the post-meeting statement’s assessment of inflation prospects and economic momentum to judge whether another rate hike is possible in the fourth quarter. (2) On Thursday, July’s international trade data will be released. The market anticipates the trade surplus will narrow slightly to about 3.25 billion CAD, down from the previous value of 3.86 billion CAD. Changes in exports and imports month-on-month will reflect the combined impact of a slowdown in global demand and fluctuations in energy prices on Canada’s trade conditions. (3) On Friday, the August labor market report will be published. The market expects about 15,000 new jobs, which is much lower than the previous value of 75,000. The unemployment rate is expected to remain unchanged at 6.4%, with average hourly wages rising about 2.8% year-on-year. If employment data is significantly weaker than expected, it may reinforce the central bank’s position to keep rates unchanged. (4) Also on the same day, August manufacturing and services PMI will be announced. Previous data show the economy remains resilient but momentum has slowed. Coupled with surging global bond yields and high crude oil prices in the external environment, the Bank of Canada’s language as it balances inflation pressure and growth prospects will be closely watched. If the central bank releases a hawkish signal, the Canadian dollar may receive short-term support.