The US job creation engine accelerated in March, further lowering market-implied odds on rate cuts in the back half of the year. According to data released by the Bureau of Labor Statistics this morning, 303,000 jobs were added in the month, with the unemployment rate falling to 3.8 percent, and average hourly earnings climbing 0.3 percent month-over-month. Ahead of the release, consensus estimates had pointed to a circa-215,000-position gain, and no major forecaster had anticipated a print above the 270,000 mark.

Hours worked – often considered a better measure of underlying labour market trends – ticked higher to 34, surprising observers – including ourselves – who had expected weather-related distortions to wash out of the date. The diffusion index – which measures the breadth of job gains – remained very positive, rising to 59.4 percent from 58.6 in February as most sectors added jobs.

The dollar is climbing in line with a move up in short-term Treasury yields as traders move to push the timing for the Federal Reserve’s first rate cut out to September or beyond. Defying consensus forecasts, the expectations gap between the Fed and other central banks continues to widen, helping tilt rate differentials more profoundly toward the dollar.

The Canadian economy unexpectedly shed jobs in March. This morning’s update from Statistics Canada shows 2,200 positions lost in the month, with the unemployment rate jumping to 6.1 percent from 5.8 percent in February as the labour force expanded and job creation faltered. Consensus estimates had pointed to roughly 25,000 new hires, with elevated population growth and still-high participation rates pushing unemployment to 5.9 percent.

Total hours worked were up 0.7 percent year-over-year, essentially unchanged on the month, and the year-over-year rise in average hourly wages for permanent employees – a factor closely watched by monetary policymakers – held at 5 percent from a year earlier.

Expectations for the language deployed during the Bank of Canada’s meeting next week are turning more dovish, putting downward pressure on the exchange rate. Markets had expected the Bank to keep policy settings and statement language largely unchanged, but today’s data – which is consistent with a slowing economic growth impulse – could see a more cautious stance come through in the statement, April Monetary Policy Report and post-decision press conference.