• „I am not confident that inflation will decline in the same way as in the second half of last year.“
• Inflation still „uncomfortably above“ 2% target
• Labor market showing signs of cooling, but uncertainties remain
• Upside risks to inflation persist, including housing and geopolitical factors
• Calls for patience in monetary policy decisions
• Critical of rapid regulatory changes in banking sector
• Advocates for thoughtful M&A framework in banking

Fed Governor Michelle Bowman delivered a wide-ranging speech touching on monetary policy, banking regulation, and liquidity concerns. On mon pol, Bowman stressed caution regarding potential rate cuts, citing persistent upside inflation risks despite recent progress. She noted that core PCE inflation averaged 3.4% annualized in H1 2024, well above the Fed’s 2% target.

Bowman highlighted several factors that could keep inflation elevated, including normalization of supply chains, geopolitical risks, and potential fiscal stimulus. She also raised concerns about immigration potentially driving up housing costs in some areas.

On the labor market, Bowman acknowledged signs of cooling but pointed to measurement challenges and data revisions complicating the assessment. She advocated for a patient approach to policy decisions, saying the Fed needs to avoid overreacting to single data points.

This is certainly a pushback on the 49% chance of 50 bps being priced in for the September meeting.

Quotable:

„Should the incoming data continue to show that inflation is moving sustainably toward our 2% goal, it will become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive on economic activity and employment.“

„But we need to be patient and avoid undermining continued progress on lowering inflation by overreacting to any single data point.“

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

• Broader US stock indices fight for a positive week with less than an hour to go
• Crude oil futures and settle at $76.84
• Key events and releases for next week’s trading
• In the future you will vote for who can keep the lights on
• Baker Hughes US oil rig count +3
• European equity close: The week finishes much better than it began
• US dollar sees some selling pressure as yields sag
• Atlantic disturbance set to grow in the week ahead as NOAA continues to see busy season
• Kickstart the FX trading day for Aug. 9 w/a technical look at the EURUSD, USDJPY & GBPUSD
• BofA: What we expect from next week’s US July inflation print
• Canada July employment change -2.8K vs +22.5K expected
• The CHF is the strongest and the AUD is the weakest as the NA session begins
• About that 75 basis point emergency cut…
• Forexlive European FX news wrap 9 Aug – The risk sentiment remains positive

It seems like ages ago, but on Monday, it seemed like markets were on the precipice. The Japan’s Nikkei 225 index on Monday fell -12.4% and analysts were figuring out where the circuit breakers would be. There were chatter on how the Fed needed to have an emergency meeting and cut rates by 75 basis points. The market priced in with 100% certainty 50 basis point cuts in September and November. Yields fell sharply.

However services ISM data didn’t come in as week, and the markets settled. By the end of the week, the flow of funds in the Forex market reversed their risk on/risk off trends. US yields erased the declines and moved higher. The US stock markets nearly erased over 3% declines in the S&P and Nasdaq indices with each closing just marginally lower.

In trading today, the USD closed mixed with gains vs the AUD and NZD and declines vs the JPY, GBP and CHF . The greenback was little changed vs the EUR and CAD.

The USDCAD is virtually unchanged after their employment data came out mixed today. The unemployment rate was unchanged from last month. The employment change was negative by 2.8K vs expectations of a gain of 22.5K, but making it not so bad, is there was a gain of 61.6K in full-time jobs. The part-time jobs felt -64.4K.

The JPY was the strongest of the major currencies today and the weakest vs the AUD.

For the trading week, the USD was mixed vs the major currencies. The greenback rose vs the CHF and GBP, but fell vs the CAD, AUD and NZD as traders bounced back those risk off/commodity currrencies. The USD was little changes vs the EUR and the JPY.

• EUR: -0.09%
• GBP: +0.30%
• JPY: +0.11%
• CHF: +0.94%
• CAD: -1.02%
• AUD: -1.00%
• NZD: -0.79%

In the US debt market, the 2-year yield is closing near the high, while the longer end is trading near lows for the day as the yield curve gets flatter. For the week, the yields are closing higher after falls on Monday on the recession fears.

• 2-year yield 4.059%, +1.5 basis points. For the week, yields rose 17.3 basis points
• 5-year yield 3.797%, -3.5 basis points. For the week yields rose 18.0 basis points
• 10 year yield 3.943%, -5.3 basis points. For the week, yields rose 15.0 basis points
• 30-year yield 4.223%, -6.3 basis points. For the week yields rose 11.1 this point

Looking at other markets:

• Crude oil is trading near $77 up $0.81. For the week the price of oil rose 4.69%
• Gold rose $4.30 or 0.17% at $2430.75. For the week gold was near unchanged at -0.46%.
• Silver fell -9 cents or -0.33% at $27.44. For the week the price fell -3.84%
• Bitcoin is trading at $60,757. For the week, the price is up $2613 going into the weekend

IN the US equities, the major indices closed higher for the day, but although the sharp declines on Monday could not be fully recouped, most of the declines were recovered..

The S&P index was the closest to positive territory with a decline of -0.04% for the week. The NASDAQ index closed lower by -0.18%.

Thnak you for your support. Have a great weekend.

This article was written by Greg Michalowski at www.forexlive.com.

With less than an hour left to go in trading, the broader stock indices are trying to fight its way to a positive close for the trading week.

Both the S&P and NASDAQ indices are currently on pace for a negative close. If it remains that way, it would represent the fourth consecutive down week for each of those indices.

At current levels, the S&P at 5345.02 is marginally lower by -0.04% – nearly unchanged on the week. The close last week was 5346.55.

The NASDAQ index is negative by -0.18 at 16747.09. The close last week was 16776.16.

It will be close, especially for the S&P, but it will take a late week run higher to snap the losing streak.

This article was written by Greg Michalowski at www.forexlive.com.

Crude oil futures are settling the day and $76.84 that is up $0.65 or 0.85%.

For the trading week, the prices closing up $3.32 or 4.51%. The gain this week comes after four straight weeks of declines. The low price it this week reached $71.67 which was the lowest level since February 5. The price is also closing higher for the 4th consecutive day today

Geopolical tensions remain high in the Middle East as Israel awaits Iran’s response to last week’s assassination of a senior official in Hamas military group in Tehran. Higher-than-expected joint inflation also contributed to the better tone in trading today.

This article was written by Greg Michalowski at www.forexlive.com.

The US CPI and Retail sales will dominate the economic releases next week. The RBNZ will announce their interest rate decision on Wednesday in NZ.

Tuesday August 13

• 9:30 PM ET: AUD Wage Price Index q/q (Estimate: 0.9%, Prior: 0.8%)
• 2 AM ET: GBP Claimant Count Change (Estimate: 14.5K, Prior: 32.3K), GBP Average Earnings Index 3m/y (Estimate: 6.5%, Prior: 6.9%)
• 8:30 AM ET USD Core PPI m/m (Estimate: 0.2%, Prior: 0.1%);USD PPI m/m (Estimate: 0.2%, Prior: 0.1%)

Wedneday August 14

• 10 PM ET NZD NZD Official Cash Rate (Estimate: 5.50%, Prior: 5.50%) RBNZ Monetary Policy Statement, Rate Statement, and
• 11 PM ET NZD Press Conference
• 2 AM ET GBP CPI y/y (Estimate: 3.0%, Prior: 3.0%)
• 8:30 AM meeting USD Core CPI m/m (Estimate: 0.2%, Prior: 0.1%);USD CPI m/m (Estimate: 0.2%, Prior: 0.1%)
• 3:30 PM ET: NZD RBNZ Gov Orr Speaks (Estimate: N/A, Prior: N/A)

Thursday August 15

• 9:30 PM ET AUD Unemployment Rate (Estimate: 4.1%, Prior: 4.1%); Employment Change (Estimate: 26.0K, Prior: 50.2K)
• 10 PM to CNY Industrial Production y/y (Estimate: 5.4%, Prior: 5.3%)
• 10 PM meeting CNY Retail Sales y/y (Estimate: 2.6%, Prior: 3.1%)
• 2 AM ET GBP GDP m/m (Estimate: 0.1%, Prior: 0.4%); GBP Prelim GDP q/q (Estimate: 0.6%, Prior: 0.7%)
• 8:30 AM ET USD Retail Sales m/m (Estimate: 0.3%, Prior: 0.0%); USD Core Retail Sales m/m (Estimate: 0.3%, Prior: 0.0%)
• 8:30 AM ET USD Unemployment Claims (Estimate: 239K, Prior: 233K)
• 8:30 AM ET USD Empire State Manufacturing Index (Estimate: -5.9, Prior: -6.6)
• 8:30 AM ET USD Philly Fed Manufacturing Index (Estimate: 6.6, Prior: 13.9)

Friday August 16

• 7:30 PM ET AUD RBA Gov Bullock Speaks
• 2 AM to GBP Retail Sales m/m (Estimate: 0.8%, Prior: -1.2%)
• 30 Amy to USD Building Permits (Estimate: 1.44M, Prior: 1.45M)
• today meeting USD Prelim UoM Consumer Sentiment (Estimate: 67.3, Prior: 66.4); USD Prelim UoM Inflation Expectations (Estimate: 2.9%, Prior: 2.9%)

As for the earnings calendar, HomeDepot, and Cisco highlight as most of the big names have already reported. Nvidia is still to come but won’t announce until August 28th.

Monday

Tuesday

• Before Open: ON Holding, The Home Depot

Wednesday

• Before Open: Dole, UBS
• After Close: Cisco

Thursday

• Before Open: Alibaba, Walmart, JD.com, John Deere
• After Close: Applied Materials, H&R Block

This article was written by Greg Michalowski at www.forexlive.com.

These comments from Brookfield CEO Bruce Flatt caught my attention:

The next 20 years will be an unprecedented period for electricity build-out. The electrification of industrial capacity, automobiles, heating for houses, and other uses is driving unprecedented growth in the demand for electricity. On top of that, the world is adding data centers for Al and cloud computing at a stunning pace.

To put this in perspective, the global installed capacity for electricity is approximately 8,000 gigawatts. To meet expected demand, this installed capacity will need to expand to more than 20,000 gigawatts in the next 20 years. In addition, nearly half of what exists today will need to be retired, as it is very carbon-intensive. Said differently, we need to more than double the current capacity (which was largely built over the past 50 years) while also replacing approximately 50% of what we have. Nothing like this has ever been attempted, but it is essential in order to reach the world’s net-zero goals and drive the Al revolution.

All this needs to happen in a world where it’s never been tougher to build large projects due to costs, financing, liability, regulation and litigiousness. I envision a future where few can take steady electricity demand for granted and elections are regularly won by who can better keep the lights on.

See also: A perfect storm is about to hit global power grids

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

Wharton professor and frequent market commentator Jeremy Siegel caused a stir on Monday by calling for an emergency 75 basis point rate cut as markets melted down. He doubled down by calling for another 75 bps in September „at minimum.“

Skip ahead a few days and he has had a change of heart.

“I no longer certainly think it’s necessary. But I want [Powell] to move
down to 4% as fast as possible,” Siegel said to CNBC.
“Would it be bad? No. But would it be necessary? No, not at this time.”

The market is pricing a 55% chance of 50 bps on Sept 18 and a 45% chance of 25 bps with 104 bps priced in through year end.

So what’s the lesson here?

The main one is that when people on TV like Siegel, Bill Ackman or Jim Cramer are panicking, it’s often a buy signal, or at least a signal that cooler heads are no longer in charge. It also highlights what’s likely to happen if things in the economy ever do get bad and that the Fed put worked.

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

Gold has perked up in the past few minutes, rising a few dollars to $2430.

That comes after a large gain yesterday and a series of higher lows over the past month. Those are reasons for optimism.

However the main feature on the daily chart is a double top near $2475.

So higher lows vs a double top? Where do I come down?

A couple things sway me towards the bullish camp.

1) The pattern may be more of a consolidation from $2360-$2475 than a double top.

2) Speculative position was washed out.

Gold had a rough ride late last week and on Monday as global markets turned ugly. I’ve often highlighted that gold does well when things are bad but not when they’re really bad. That was the case Monday as the Nikkei fell 12%, US tech was beaten up and the VIX hit 60.

That triggered a run on specs, which were at eye-watering levels in the weekly CFTC report:

I would guess we will see a further drop in gold specs in the CFTC data due out later today. That will show that some of the speculative froth has been removed from gold.

The one thing that makes me cautious is the Middle East. The market has still priced in some chance of an Iran-Israel war or some wider hostilities but that’s looking less likely. It’s always tough to gauge how much of a geopolitical premium is priced in but I still suspect it’s higher now rather than lower.

Ultimately, price action will be the arbiter but with the US headed for a rate cutting cycle and the economy slowing, there case for buying gold dips is solid.

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

• 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.

The highlight on the North American economic calendar today is the Canadian July employment report but it comes amidst sign that consumer spending is slowing down.

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.