Morning Note: ADP Jobs Report Eyed; BoC Rate Decision; ISM Services PMI

Markets eye ADP jobs report ahead of NFP

The U.S. ADP Employment Change registered a modest 62,000 increase in April, notably below historical averages and market expectations. This weak reading raised concerns about slowing job creation, possibly driven by temporary disruptions such as adverse weather, lagging demand in interest-rate-sensitive sectors, or cautious business sentiment amid economic uncertainty.

However, the forecast for May has been revised slightly higher to 70,000, reflecting a belief that April’s softness was transitory. Seasonal hiring patterns, particularly in construction, hospitality, and retail, typically strengthen in late spring. Recent macroeconomic data, including stable consumer spending and resilient corporate earnings, suggest that the labour market remains fundamentally intact. The higher expectation also aligns with the broader narrative of a soft landing, where the economy slows but avoids a sharp contraction, encouraging businesses to resume hiring cautiously. This data is set to be released today at 12:15 GMT.

(EUR/USD Daily Chart, Source: Trading View)

From a technical analysis perspective, the EUR/USD currency pair has been in a bullish trend since mid-January 2025, as indicated by a series of higher highs and higher lows. Recently, it found support and closed above the swap zone of 1.1180 – 1.1210, suggesting that bullish momentum remains intact. This valid upward momentum could potentially continue driving the pair higher to retest the resistance zone at 1.1530 – 1.1570.

BoC Expected to Hold Rates Steady at 2.75%

The Bank of Canada (BoC) held its key interest rate steady at 2.75% during its last policy meeting, signalling a wait-and-see approach as it assessed inflation dynamics and overall economic performance. This level marked a maintained stance amid easing price pressures and moderate growth, as policymakers aimed to strike a balance between supporting the economy and keeping inflation expectations anchored.

For the upcoming rate decision, the market consensus remains unchanged, with expectations firmly at 2.75%. This reflects continued confidence that the BoC will keep rates on hold as it monitors further data on inflation, wage growth, and consumer activity. With signs of cooling inflation and weaker housing activity, there appears to be little urgency for a rate hike or cut at this stage, reinforcing the case for a steady policy stance. This data is set to be released today at 13:45 GMT.

(USD/CAD Daily Chart, Source: Trading View)

From a technical analysis perspective, the USD/CAD currency pair has been in a bearish trend since the beginning of February 2025, as indicated by lower highs and lower lows. Currently, it is retesting the support zone of 1.3680 – 1.3710. If it can find support there, it may move higher to retest the swap zone of 1.3830 – 1.3860. Conversely, if bearish momentum continues to push the pair lower, it could potentially break below the support zone and decline further.

U.S. ISM Services PMI Forecast Edges Up to 52

The U.S. ISM Services PMI came in at 51.6 in April, indicating modest expansion in the services sector, as values above 50 signal growth. While the reading was slightly softer than earlier months, it still reflected resilience in areas such as business activity and new orders, despite ongoing concerns about inflation and consumer demand.

The expected value for May has been slightly revised upward to 52. This modest increase likely reflects optimism around improving consumer sentiment, seasonal strength in service-related industries, and steady labour market conditions. With inflation gradually cooling and the Fed maintaining a stable interest rate environment, service providers may be experiencing a more favourable operating climate, leading to slightly stronger growth expectations for May. This data is set to be released today at 14:00 GMT.

(S&P 500 Index Daily Chart, Source: Trading View)

From a technical analysis perspective, the S&P 500 index has been in a bullish trend since early April 2025, rebounding from the support zone of 4,900 – 4,960, as evidenced by a series of higher highs and higher lows. Recently, it broke above the swap zone of 5,800 – 5,850, retested it, found support, and continued moving upward. This valid bullish structure may potentially drive the index toward a retest of the resistance zone at 6,100 – 6,150.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.