- US Retail Sales expected to rebound and rise 0.2% m/m
- Fed no longer expected to hike rates in September.
- US dollar is trading lower across the board.
USDCAD open: 1.3890, overnight range 1.3881-1.3937 close 1.3930, WTI 82.06, Gold 4,356.88
The Canadian dollar rallied on the back of this week’s benign US inflation data. US PPI rand CPI were both lower than expected which supported the bearish outlook after last Friday’s soft NFP data.
Its crunch time for the 50% tariff that Trump threatened to impose on Canada on August 19 and US automakers. Negotiations are ongoing.
The odds of a Fed rate hike in September were around 60% a month ago. Today, they are a mere 30% thanks to but weak jobs data and two soft inflation reports. Still, Cleveland Fed President Hammack pushed back, insisting tighter policy is needed for 2% inflation
Equity markets in Asia closed with Tokyo's Topix adding 0.51%, while the Hang Seng in Hong Kong dropped 1.10% and Australia's ASX 200 lost 0.80%.
As of 7:20 am, Germany's DAX is up 0.66%, and the UK FTSE 100 is down 0.15% while the French CAC-40, and S&P 500 futures are close to unchanged. The 10-year Treasury yield is 4.653%, the and the DXY is at 99.66.
EURUSD traded in a 1.1526-1.1557 range and is moving sideways with a mildly positive bias after this morning's Q2 GDP, employment, and trade figures. The trade numbers delivered the surprise, showing an €8.6 billion surplus against expectations for a €2.2 billion shortfall, while growth and jobs data matched forecasts.
GBPUSD climbed steadily inside a 1.3482-1.3528 band, advancing from the Asian session low to reach its peak in New York. Broad greenback selling drove the move as markets sharply pared the odds of a September Fed hike.
USDJPY drifted within a 159.15-159.55 band, retaining a bid tone as the pair edged toward 160.00, the zone widely viewed as the trigger point for Bank of Japan intervention. Speculation is circulating that the BoJ will deliver a 25 bp rate increase in September alongside plans to quicken the tempo of subsequent hikes.
AUDUSD firmed in a 0.7054-0.7078 band, drawing support from the soft US dollar. Prices are being underpinned by the combination of fading Fed hike expectations and the RBA's recently hawkish stance.
Today’s US data includes Retail Sales ex-autos which are forecast to rise 0.2%, reversing the prior month's 0.2% drop and the Michigan Consumer Sentiment Index which is projected at 54.5, down from July's 55.2.
The Canadian data includes Manufacturing Sales and Wholesale Sales for June.
