Briefly:

(August 4, 2006) The odds of the U.S. Federal Reserve pausing its credit-tightening cycle on August 8 have been “markedly increased” as U.S. employment figures failed to excite, according to TD Economics.

“The 3-month trend is only running at 112,000 [new jobs] a month – hardly inspiring stuff,” wrote Eric Lascelles, senior strategist, FX, and fixed-income research and strategy, at TD Securities. “Given its weakness in combination with some of the dovish rhetoric issued by Bernanke and company, we stand firm on our view that the most likely outcome of the Fed decision is a pause.”

Despite the increase in jobs, the unemployment rate actually increased, from 4.6% to 4.8%.

Meanwhile in Canada, StatsCan announced a modest decrease in jobs, with 5,500 net positions disappearing. The slight decline helped to push the unemployment rate up, from 6.1% to 6.4%.

“These numbers clearly support the Bank of Canada’s recent decision to stop hiking interest rates, and should prompt a reconsideration of the Bank’s view that our economy is operating at capacity,” said Andrew Jackson, chief economist with the Canadian Labour Congress.

While North American central bankers are expected to pause, their counterparts in Europe hiked rates earlier in the week. The European Central Bank raised its key rate 25 basis points to 3.00%, while the Bank of England also boosted rates 25 basis points to 4.75%.

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