• Signs mount that the Canadian consumer is slowing with jobs report due today
• PBoC: Will guide reasonable credit growth
• Fed’s Collins: It will be appropriate to ease soon if data aligns with expectations
• What to watch out for on the economic calendar next week?
• US futures stick with the bounce from yesterday so far on the session
• Weekly update on interest rates expectations
• Italy July final CPI +1.3% vs +1.3% y/y prelim
• European equities keep slightly higher to start the day
• FX option expiries for 9 August 10am New York cut
• What are the main events for today?
• Japan’s Nikkei salvages a positive close on the day, and just down over 2% on the week
• Germany July final CPI +2.3% vs +2.3% y/y prelim
• Little on the agenda in European morning trade today
• Japan’s Nikkei stumbles in the final stages of trading today
• A calmer mood set to greet European traders later

Markets:

• CHF leads, AUD lags on the day
• European equities higher;
  S&P 500 futures +0.20%
• US 10-year yields down 4.1 bps
  to 3.951%
• Gold
  up 0.20% to $2,432
• WTI
  crude up 0.30% to $76.42
• Bitcoin
  up 2.01% to $60726

The
European session today was once again uneventful with no fresh economic data or
notable headlines. The risk mood remains positive following yesterday’s US
jobless claims figures, and I don’t see anything that can change it going into
the weekend unless we get some scary headlines from the Middle East.

In the markets, risk assets are faring pretty well with equities and bitcoin being up to on the day. The major pairs are mostly flat and the US Treasuries are up. The notable mover is crude oil which is likely being supported by defensive positioning into the weekend risk as the tensions in the Middle East remain present.

In the American
session, we will get the Canadian labour market report where the consensus
expects the data to show 22.5K jobs added in July vs. -1.4K prior and the
Unemployment Rate to tick higher to 6.5% vs. 6.4% prior.

That’s all folks.
Have a great weekend!

This article was written by Giuseppe Dellamotta at www.forexlive.com.

RBC is out with its latest consumer spending tracker based on credit card data and Canada’s largest bank saw a 0.6% decline in July.

„Canadian consumers are pulling back this summer after years of pandemic revenge spending,“ RBC writes, nothing that sales have fallen in six of the past seven months.

The report notes that spending on food and drinking establishments was particularly hard hit in July, falling 0.88% in a sign of a belt-tightening consumer. Home-related spending also fell 3.3% as high interest rates bite.

Consumer spending continues to show signs of stress as many wait for the impact of the BoC rate cuts to filter through to mortgage interest costs. Interest rates are still high. Canadians renewing fixed-rate mortgages in 2024 still face significantly higher rates, which will cut into broader purchasing power. However, as the BoC continues its path to lower rates, mortgage holders will feel some relief and at least partially restored purchasing power upon renewal. We expect consumption will remain soft (relative to still-strong population growth) over the second half of the year before picking up in 2025 as the BoC continues to ease monetary policy.

At 8:30 am ET today (1230 GMT), the Canadian jobs report for July is expected to show unemployment ticking up to 6.5% from 6.4%. Job gains of 22.5K are expected after a loss of 1.4K in June.

The market is pricing in a 90% chance of a 25 bps Bank of Canada cut on Sept 4 with a 10% probability of 50 bps. A 25 bps cut is fully priced in at all three remaining meetings this year, which would bring the overnight rate to 3.75%.

This article was written by Adam Button at www.forexlive.com.

• Prudent monetary policy should be flexible, moderate, precise and effective.
• Will guide reasonable creditr growth.
• Will lower firms‘ financing and household credit costs steadily.
• Will promote the steady decline in the cost of comprehensive social financing.
• Will maintain fundamental stability of Yuan exchange rate at a reasonable equilibrium level.
• Will implement measures to prevent and resolve risks in key aread such as real estate, local government debt and small and medium-sized financial institutions.
• Will also keep liquidity reasonably ample.
• Will prevent the formation and self-reinforcement of unilateral uniform expectations, guard against risk of exchange rate overshooting.
• Will conduct stress tests on financial institutions‘ bond asset holdings risk exposure and prevent forex risks.
• Will gradually increase the purchase and sale of Treasury bonds in the central bank’s open market operations.
• Will strengthen the authority of policy rates, deliver clearer adjustment target signals of interest rates to market.
• Will strengthen makret expectation guidance and focus on changes in long-term bond yields as economy rebound.
• Will strengthen guidance of market expectations, pay attention to changes in long-term bond yields during economic recovery.
• Will increase construction and supply of affordable housing to meet rigid housing needs of wage earners.
• Will satisfy demand for working-class groups, support various improvements to housing demand for households in rural and urban areas.

This article was written by Giuseppe Dellamotta at www.forexlive.com.