The European session has limited data releases, primarily low-tier indicators. Attention shifts to the American session with the Canadian Employment report, the US Non-Farm Payrolls, and Fed Chair Powell’s speech.
The Canadian Employment report is anticipated to show an addition of 10,000 jobs in March, compared to 1,100 in February, with the unemployment rate expected to rise to 6.7%. Market expectations indicate a 52% probability of a rate cut at the next meeting and 66 basis points of easing by year-end due to global growth concerns.
US Non-Farm Payrolls Expectations
For the US, the Non-Farm Payrolls report is likely to indicate 135,000 jobs added in March, down from 151,000 in February, with the unemployment rate holding steady at 4.1%. Average Hourly Earnings are predicted at 3.9% year-on-year, and Average Weekly Hours at 34.2.
Labour market conditions remain solid, and Fed officials note no inflationary pressures emerging from this area. Jobless claims have not raised concerns, despite a recent cycle high in continuing claims.
Central bank speakers scheduled include Fed Chair Powell at 15:25 GMT, followed by Fed’s Barr at 16:00 GMT, and Fed’s Waller at 16:45 GMT.
This morning’s European trading window presents a rather light calendar, with only low-impact indicators on offer—none expected to shift sentiment or alter pricing materially. As such, attention now anchors itself to developments later in the day, specifically those emerging from across the Atlantic.
The Canadian Employment report is poised to show a pickup in headline job growth—roughly 10,000 positions added in March, marking an improvement from February’s subdued 1,100 reading. Nonetheless, the unemployment rate is set to edge higher to 6.7%, suggesting a flicker of slack forming in the labour market. Market pricing currently leans toward a very modest easing profile by year-end, signalling that policymakers are increasingly leaning towards support in response to broader discouragement in growth trajectories globally. The current bias in interest rate expectations reflects such sentiment, with contracts now embedding about 66 basis points of cuts over the coming months.
US Labor Market Outlook
Looking at the US, the labour market appears to have maintained its footing, though pace is clearly moderating. Non-Farm Payrolls are projected at 135,000 for March, lower than February’s figure of 151,000. No noticeable change is forecast in the jobless rate, which holds at 4.1%, while wage growth, captured through Average Hourly Earnings, is expected to hover at 3.9% year-on-year. This suggests that while job creation slows slightly, pay pressures remain contained. In the context of monetary policy, this neatly aligns with the message that inflationary forces from employment channels remain muted.
Weekly jobless claims, including the ongoing uptick noted in continuing claims, are yet to sound any alarms among policymakers. For now, it seems safe to assume that the labour market remains healthy, albeit no longer as tight as it once was.
Now, to the more immediate question—what should we make of Powell’s speech scheduled for this afternoon, followed by remarks from Barr and Waller? Timing places them late in the day’s trade, so reactions might extend into Monday’s open if remarks are materially unexpected. From recent public appearances, we know that the Chair continues to prioritise incoming data over pre-set paths, which in practice translates into curve exposure remaining especially sensitive to any forward-looking language. The same applies to volatility pricing, particularly on the front end.
Given that NFP prints shortly before Powell, it essentially becomes a prelude to his language. In the event that the job figure surprises to the upside while wage metrics stay moderate, such an outcome would further reinforce the Fed’s current patience. However, any weakness in wage figures or a rise in the unemployment rate would begin to chip away at the “higher for longer” thesis that markets have gradually been softening.
Noisy intraday fluctuations will of course follow, especially in SPX-linked options and short-term rate vol—keep an eye there. A calm reaction from options markets post-NFP could well limit Powell-driven swings, but if dispersion noticeably widens, we should be ready for a pickup in implieds headed into Monday’s Asia session.
As for positioning, front-end rate futures are now tightly pinned to just over two quarter-point cuts through December. Given how datadependent the Fed remains, pricing will stay reactive—not predictive. That means missteps around payrolls could rapidly skew expectations, especially if reinforced by tone from today’s slate of policymakers.
Interest rate traders who’ve maintained short gamma exposure may want to reflect on today’s data and how it shifts the probabilities. We sense there’s limited appetite for strong directional conviction until clarity builds through the spring. Data like this tends to push implieds in clusters—watch for that, and adjust quickly where necessary.
