Morning Note: U.S. Payroll Growth, Canada Job Market Weakens, Tesla Risks EV Credits

U.S. Nonfarm Payrolls Forecast to Drop

The upcoming U.S. labor market data for May points to a cooling but stable economic environment. This data is set to be released today at 12:30 GMT. average hourly earnings are expected to rise 0.2%, the same as last month. This suggests that wage growth is steady and not accelerating, a sign that inflationary pressures from the labor market may be easing, something the Federal Reserve will likely welcome as it looks to maintain its restrictive stance without over-tightening.

Meanwhile, non-farm payrolls are projected to come in at 130k, notably lower than the 177k seen previously. This implies that businesses may be slowing their hiring pace, possibly in response to softer demand or elevated borrowing costs. Despite this, the unemployment rate is expected to stay unchanged at 4.2%, indicating that while job growth is moderating, overall labor market conditions remain resilient. The data suggests a gradual cooling rather than a sharp downturn, consistent with the Fed’s goal of achieving a soft landing.

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

From a technical analysis perspective, the USD/JPY currency pair has been moving in a bearish trend since mid-January 2025, as indicated by the pattern of lower highs and lower lows. It rebounded at the end of April 2025 but was rejected at the resistance zone of 147.70 – 148.20, pushing it lower to retest the support zone of 142.00 – 142.60. Recently, it has found support within this support zone, potentially driving the pair higher to retest the resistance area.

Is Canada’s Job Market Losing Strength?

The forecast for Canada’s upcoming May labor data shows more cautious expectations compared to April. These data are set to be released today at 12:30 GMT. Full-time employment is projected to decline by 10k, a sharp reversal from the 31.5k increase last month. This suggests concerns over weakening business confidence or reduced hiring demand in higher-quality, stable jobs. Combined with a modest 5k increase in overall employment change, down from 7.4k previously.

The unemployment rate is expected to rise slightly from 6.9% to 7%, reinforcing the view that Canada’s job market may be losing some momentum. While not a drastic shift, the combination of expected full-time job losses and a higher jobless rate indicates that labor slack is slowly building. These projections reflect a cautious outlook, likely shaped by economic headwinds and the Bank of Canada’s policy stance.

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

From a technical analysis perspective, the USD/CAD currency pair has been moving in a bearish trend since early February 2025, as indicated by the pattern of lower highs and lower lows. Recently, the pair broke below the support zone of 1.3700 – 1.3730, indicating that bearish momentum persists. Therefore, this valid bearish structure may potentially continue to drive the pair lower.

Trump Threatens Tesla Subsidies

Tesla shares plunged 14% yesterday after a public clash between Donald Trump and Elon Musk intensified. Trump threatened to cut federal contracts and subsidies for Musk’s companies following Musk’s vocal criticism of a Trump-backed tax and spending bill. The billionaire CEO argued the bill would worsen national debt, while Trump claimed Musk was only upset because it scrapped EV mandates that benefited Tesla.

The bill proposes eliminating EV tax credits, a key driver of Tesla’s past sales under the Biden administration. Without these incentives, consumer demand for electric vehicles could weaken, potentially impacting Tesla’s already slowing revenue, which fell 9% year-over-year in Q1. The escalating tension between the two figures adds further uncertainty for Tesla investors.

(Tesla Daily Share Price Chart, Source: Trading View)

From a technical analysis perspective, Tesla’s share price has rebounded and been moving in a bullish trend since April 2025, as indicated by a pattern of higher highs and higher lows. However, it was recently rejected at the resistance zone of 352 – 364, pushing the price lower. It is currently retesting the swap zone of 274 – 286. If the price manages to find support within this zone, it could potentially rebound and move higher to retest the resistance area. Conversely, if this swap zone fails to hold, the price may continue to decline, signaling a possible shift from a bullish to a bearish trend.

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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.