With holiday closures in Canada on Thursday of last week and U.S. markets closed today for Independence Day, trading volumes will continue to be thin.

Canadian markets head into this week still trying to digest the implications of recent developments in the U.S., although markets on both sides of the border will pondering the Federal Reserve’s statement on Wednesday that was fairly benign in tone towards future inflationary pressures. Add in the far weaker-than-expected U.S. employment growth, plus a drop in factory orders that came out Friday, not to mention the disappointing results for U.S. construction spending and vehicle sales released on Canada Day and Bay Street will have much to think about.

The question is: What does it all mean for interest rates?

From an economic point of view this week, investors can expect a quiet first few days, with building permits for the month of May due out on Wednesday, along with the Ivey purchasing managers’ index for June. The big day will be Friday when the labour force survey for June as well as and new home construction activity during the month of June, plus builders’ new home prices in May are released.

The employment figures may offer a hint of where near-term rates are headed. Warren Lovely, economist with CIBC World Markets, is calling for a slightly below-consensus 20,000 employment gain in June. “That would hold the jobless rate at 7.2% and edge the employment rate towards the record high enjoyed late last year,” he says in a report, adding the bank continues to call for only a single quarter-point interst rate hike (in September) in Canada this year.

In the U.S., it will be a relatively light week by way of fresh data releases, notes Royal Bank Financial Group assistant chief economist Derek Holt. U.S. markets are closed on Monday. The non-manufacturing ISM survey for June plus weekly retail sales are out Tuesday, while weekly initial unemployment claims are scheduled for Thursday and wholesale trade and inventories are due Friday for the month of May.

“The last three days have witnessed a significant rise in fresh doubts over the pace and timing of future rate movements by the Federal Reserve,” Holt says in a report. “Despite pipeline inflationary pressures and what is by now a well-established end to the earlier jobless recovery, the Federal Reserve is now communicating dovish comments on future expected inflation that markets are reconsidering alongside weakness in a number of recent indicators.”