Canada's June unemployment rate fell to 6.5% as employment rose, though by a modest 18,200 positions, underscoring a softer labor pickup despite beating expectations.

Most gains came from part-time work in services, notably accommodation and food services, and wholesale/retail trade, with youth employment improving as 33,000 jobs were added for ages 15 to 24, marking a stronger summer start than last year.

Global stock markets declined as higher oil prices raised inflation concerns and fed expectations of tighter monetary policy.

The U.S. dollar stayed firm amid expectations of a Federal Reserve rate hike later in the year, with safe-haven demand supported by renewed Iran-related tensions and higher oil prices.

Analysts, including a prominent economist from CIBC, say policymakers can stay patient on rate decisions as inflation pressures ease and energy prices ease.

Scotiabank analysts note the Canadian dollar has shown resilience amid overnight volatility, with negative sentiment moderating and spot levels remaining elevated.

Overall, the market tone suggests cautious optimism for Canada's export-reliant economy, aided by stronger domestic data and higher commodity prices.

The Bank of Canada has kept its overnight rate at 2.25% for five consecutive decisions, with economists forecasting a steady hold through year-end and potential increases to 3.25% by end-2027.

Markets pricing imply a higher probability of BoC rate hikes this year, alongside elevated odds for a U.S. rate increase, reflecting shifting policy expectations.

Uncertainty remains tied to U.S. tariffs, trade tensions under CUSMA, and commodity-price spikes from regional geopo l itical events.

June's jobs data is a key input for the BoC before its upcoming decision, marking its last major labor-market report ahead of policy moves.

Source notes: Statistics Canada data corroborated by economists from Indeed Canada, RBC, and the Canadian Chamber of Commerce.