Canada's June jobs report is expected to show flat employment growth and a slight rise in the jobless rate to 7.1%, but recent fiscal tightening poses downside risks. A soft print could fuel speculation of an earlier Bank of Canada rate cut, adding pressure to an already unattractive Canadian Dollar (CAD), ING's FX analyst Francesco Pesole notes.

Loonie faces risks on weak employment print

"Canada releases June jobs data today. Consensus is for no change in employment, while the unemployment rate is expected to edge up from 7.0% to 7.1%. Recent government spending cuts point to an increased risk of job losses, and in our view, markets continue to underprice the probability of a September rate cut by the Bank of Canada (15bp)."

"A particularly weak jobs print could even spark speculation of a move as early as 30 July. It may be too soon to position for CAD weakness ahead of any clarity on the US-Canada trade deal, but we continue to see the loonie as broadly unattractive."