Today's headlines: UK election hands Labour sizable majority | US employment gains expected to slow | Canadian unemployment due to rise

UK election hands Labour sizable majority

With very few constituencies yet to declare their results, it is clear the Labour Party, which has been in opposition for 14 years, will become the next government with a substantial majority. The ‘first past the post’ system disguises much of the bigger picture story but I'm sure we will hear a lot about that in the days ahead. As far as the foreign exchange market is concerned, it is too early to see any major movement in the pound. The GBP/USD rate is largely unmoved at USD 1.2770. It is the same story with the GBP/EUR rate at €1.1800 and other exchange rates involving the pound are similarly flat. We have no major data from the UK today, so politics and events overseas will drive the value of the pound as markets wind down into the weekend.

US employment gains expected to slow

American traders will return to their desks today after their 4th of July celebrations and get stuck into the June employment data. There is an expectation that the pace of jobs growth outside of the agricultural sector is slowing and we may only see circa 160,000 jobs created in June. It is likely the unemployment rate will remain around 4% but the Average hourly earnings figure is likely to have slipped from 4.1% in May to 3.9% in June. The US Federal Reserve will be concerned the labour market is cooling. Whether that will be enough to bring forward interest rate cuts is another matter. We are still expecting them to keep their base rate on hold until 2025 but we might get a view on that when the Federal Reserve publishes the monetary policy report later in the day. Right now, the? GBP/USD rate is $1.2770 and the EUR/USD rate is a tad higher at €1.0825.

Canadian unemployment due to rise

This afternoon will bring Canada's employment data as well. The market forecasts suggest the unemployment rate will rise to 6.3%, up a tad from the May figure of 6.2%. We will also see the Ivey purchasing managers index for June, which is forecast to have risen from 52.0 in May to 53.0 in June. A softer labour market but improving business confidence is very definitely a dilemma for the Bank of Canada. The Canadian dollar is largely unmoved ahead of this data but that may not be the case by the end of the day. Right now the GBP/CAD rate is up to CAD 1.7378 in the interbank market.

Today's Major Economic Releases

09:00 EUR Retail Sales (YoY)(May)?

12:30 CAD Net Change in Employment(Jun)?

12:30 CAD Unemployment Rate(Jun)?

12:30 USD Average Hourly Earnings

12:30 USD Nonfarm Payrolls(Jun)?

Interbank Exchange Rates