– Loonie rises despite weak employment numbers.
– Top-tier data glut coming down the pipe this week, but not today.
– US dollar slides undecided after dull overnight session.
USDCAD: open 1.3721, overnight range 1.3719-1.3741, close 1.3731, WTI $77.75, Gold, $2443.27
The Canadian dollar not only survived a second consecutive weaker-than expected employment report, but it also managed to grind out a small gain. Employment fell by 2,800 in July, far below predictions for an increase of 22,500. The unemployment rate remained steady at 6.4%. The results will not dissuade BoC policymakers from cutting rates again on September 4.
All eyes are on the upcoming US CPI, PPI, and Retail Sales reports, with analysts keeping a close watch on what they might mean for Fed monetary policy. Some predict the CPI release could swing the S&P 500 by as much as 1.2%. That said, any market reaction will likely be fleeting, with a slew of major economic reports still to come ahead of the September 18 FOMC meeting, not to mention the Kansas Fed’s Jackson Hole Symposium on August 23.
WTI oil prices remain firm, buoyed by geopolitical tensions in the Middle East. WTI climbed from 76.72 to 77.77 on fears of potential supply disruptions, even though traders are still expecting an oil glut as we move into the new year.
EURUSD is drifting aimlessly within a tight 1.0911-1.0930 range, with the Eurozone data calendar looking sparse and ECB officials seemingly on holiday.
GBPUSD is steady within a 1.2747-1.2782 range as traders await UK employment data tomorrow, followed by CPI, PPI, and Retail Sales reports on Wednesday. BoE board member Catherine Mann flagged that services inflation is still too high, and wages are rising faster than the BoE expected. She voted against a rate cut at last week’s meeting, and the upcoming data may confirm her fears.
USDJPY bounced between 146.60 and 147.45, with the low touched during Asian trading. A holiday in Japan thinned market liquidity, but USDJPY found support after former BoJ policymaker Hideyuki Sakurai (2008-2013) warned that the BoJ might struggle to tighten policy further this year due to market turmoil.
AUDUSD see-sawed in a 0.6565-0.6603 band, mirroring Friday’s action. Selling pressure eased after RBA Deputy Governor Andrew Hauser warned that persistent inflation could trigger a rate hike. Governor Michele Bowman echoed similar concerns last week.
NZDUSD climbed from an overnight low of 0.5989 to 0.6032, sitting at the top of that range as New York trading kicks in. Thursday’s RBNZ monetary policy decision is a coin toss, with a Bloomberg survey of 21 economists showing a split—12 expect rates to remain unchanged, while the rest think it could be the start of an easing cycle. Recent hawkish rhetoric from RBNZ officials suggests they might ignore data supporting a rate cut to avoid being caught off guard.
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