• 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.

• The cautious mood holds so far in European morning trade
• JP Morgan raises probability of US recession by year-end to 35%, up from 25% previously
• Magnitude 7.1 earthquake hits Japan’s southern region, tsunami warnings issued
• AUD/USD holds higher for now, traders watching risk sentiment for the next clue
• European indices marked lower at the open today
• What are the main events for today?
• FX option expiries for 8 August 10am New York cut
• Eurostoxx futures -0.8% in early European trading
• It’s an empty economic calendar in Europe today
• The storm clouds are starting to brew again

Markets:

• AUD leads, USD lags on the day
• European equities lower;
  S&P 500 futures +0.03%
• US 10-year yields down 2.2 bps
  to 3.921%
• Gold
  up 1.30% to $2,412
• WTI
  crude up 0.05% to $75.26
• Bitcoin
  up 4.28% to $57501

The European
session has been uneventful with no economic data or notable headlines. The
market is waiting for the US jobless claims figures as the data might either
lift the risk sentiment or trigger another wave of risk-off flows.

In the markets,
the most notable mover has been the AUD as it rallied during the Asian session
on hawkish comments from RBA’s Governor Bullock. Other than that, there’s nothing
else that catches the eye.

The focus will
now switch to the US jobless claims report. Initial Claims are expected at 240K
vs. 249K prior, while Continuing Claims are seen at 1870K vs. 1877K prior. The distribution
of forecasts is skewed to the downside with most seeing the data coming out in
the 235K-245K range.

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

The market is still licking its wounds as the price action remains
tentative ahead of the US Jobless Claims today. The ugly US ISM Manufacturing PMI and the weak US
NFP report of last week are still fresh in everyone’s mind.

At the moment the market is
expecting the Fed to cut rates by 50 bps in September and a total of 110 bps of
easing by year-end.

In the American session we
will get the latest US Jobless Claims figures. Given the market’s sensitivity
to weak releases, if we get bad data, we might see some more risk-off flows coming
into the market. On the other hand, good figures could see the risk sentiment improving.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 bounced around the swing low level at 5200 but
eventually erased most of the gains as the sentiment remains fragile. This is
where we can expect the buyers to step in with a defined risk below the level
to position for a rally into the 5400 level. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into the
5000 level next.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we now have a strong resistance
around the 5366 level where we can also find the 50% Fibonacci
retracement level for confluence.
This has created a range between the 5200 support and the 5366 resistance. The
buyers will look to go long from the support while the sellers will keep on
going short from the resistance.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see the recent catalysts that eventually pushed the market down over 8%. There’s
not much else we can glean from this timeframe as the market participants will
wait for the US jobless claims today before piling in with more conviction. The
red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the latest US Jobless Claims figures which will likely be a
strong market moving release given the market’s focus on the labour market. The
market will also pay close attention to Fed members’ comments with Fed’s Barkin
scheduled to speak later in the day.

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

S&P 500 futures are down 0.3% while Nasdaq futures are down 0.1% currently. Meanwhile, 10-year Treasury yields are down 5.8 bps to 3.909% as traders are staying more vigilant on the session. USD/JPY is down 0.4% to 146.15 but is off session lows of around 145.65, helped by another bounce off its 100-hour moving average.

European indices continue to be weighed down as well with the DAX down 0.7% and CAC 40 down 1.1%. That owes much to a catch up to Wall Street losses yesterday as well. It’s all still to play for on the day though, as markets are moving with a sense of caution. All eyes are on the US weekly initial jobless claims next at 1230 GMT.

This article was written by Justin Low at www.forexlive.com.

The surprisingly weak US NFP report last Friday triggered risk-off flows. Interestingly,
while many major currencies weakened against the USD, the Euro strengthened a
lot which reminded the famous words from former ECB’s President Draghi when he
said “The Euro is like a Bumblebee. This is a mystery of nature because it
shouldn’t fly but it does.”

It might be due to yields
spreads shooting in favour of the Euro as the market priced in a very
aggressive rate cuts path for the Fed or just because it’s the second largest world’s
reserve currency. Anyway, at the moment the market is expecting the Fed to cut
rates by 50 bps in September and a total of 110 bps of easing by year-end.

For the Euro, the market is
seeing a 25 bps cut in September and a total of 68 bps of easing by year-end.
The ECB speakers hinted that the market’s path for interest rates is reasonable
but the recent events in the markets have been exaggerated for just a single
data point.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD broke through the 1.09 resistance following the weak US NFP report
and extended the gains into the 1.10 handle. That’s where the sellers stepped
in with a defined risk above the level to position for new lows. The buyers
will want to see the price breaking above the 1.10 handle to increase the
bullish bets into the 1.1136 level next.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see the strong bullish impulse that we got on the US NFP release that led to key
breakouts of the downward trendline and the 1.09 resistance. We have
now a nice support zone around the 1.09 handle where we can also find the 50% Fibonacci
retracement level for confluence.

If the price gets there, we
can expect the buyers to step in with a defined risk below the support to
position for a rally into new highs with a better risk to reward setup. The
sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the 1.0812 level next.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a decent resistance zone around the 1.0940 level where the
price got rejected from several times in the past days. This might act as kind
of a barometer for the sentiment with the price staying above being more
bullish and staying below being more bearish. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the latest US Jobless Claims figures which will likely be a
strong market moving release given the market’s focus on the labour market. The
market will also pay close attention to Fed members’ comments with Fed’s Barkin
scheduled to speak later in the day.

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

Crude oil sold off pretty
heavily in the latter part of last week as we got some very weak US data
releases first with the ISM Manufacturing PMI and then with the NFP report. The
market eventually bounced back on Monday and extended the gains yesterday with
the appointment of the new Hamas leader being the likely catalyst as he’s seen
as more hard-line.

This follows the assassination
of the former Hamas leader Ismail Haniyeh in Iran with Israel being blamed for
the attack. The tension in the Middle East continues to be high as the world is
waiting for Iran’s retaliation and fears a wider escalation. This keeps the
supply side of the equation uncertain and raises the geopolitical risk premium.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil dropped all the way back to the 72.50 low where we got a
bounce on Monday and then a stronger rally on Wednesday. The sellers will want
to see the price breaking below the 72.50 level to increase the bearish bets
into the 65.00 price region.

The buyers, on the other
hand, will look for a rally back into the 80.00 level although we will need some
key breaks on the lower timeframes to get the momentum going.

Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price yesterday broke above a minor resistance
around the 74.50 level and extended the rally into the 76.00 handle. The price
is now pulling back to retest the level and that’s where we can expect the
buyers to step in with a defined risk below the level to position for a break
above the major trendline.

The sellers, on the other hand,
will want to see the price falling below the level to increase the bearish bets
into the 72.50 level targeting a break below it.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have also the 38.2% Fibonacci
retracement level adding confluence to the support zone around the 74.50
level. If the price rallies into the major trendline, we can expect the sellers
to lean on it to position for a drop back into the lows with a better risk to
reward setup. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the latest US Jobless Claims figures which will likely be a
strong market moving release given the market’s focus on the labour market. The
market will also pay close attention to Fed members’ comments with Fed’s Barkin
scheduled to speak later in the day.

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

• It is desirable for currencies to move in a stable manner reflecting fundamentals
• Excessive volatility increases uncertainties, reduces predictability for businesses
• No change to Japan’s economic outlook despite recent market volatility
• Closely monitoring financial markets with a sense of urgency, and also calmness

A 2,000 pips range in a span of a month is probably more than what Tokyo bargained for when they decided to intervene in July. There is a calmer mood in markets right now but it doesn’t mean that volatility has died down. It will take a while for fears to abate further, provided that there aren’t any more shocks along the way. In that lieu, do be mindful of the US weekly initial jobless claims tomorrow as one a potential trigger on the economic calendar.

This article was written by Justin Low at www.forexlive.com.

• It is not a reaction to fundamental issues with the economy
• If confidence in slowing trend of inflation strengthens, rate cuts can continue
• The path to inflation target is still bumpy

Even so, a repeat of the Friday and Monday rout in markets risks further tightening in financial conditions and could still prompt central banks into action. Or at least traders will wish for that to happen amid more kicking and screaming to come, that is.

This article was written by Justin Low at www.forexlive.com.