The USD steadies, oil prices weaken, equity markets are up, and US yields are mixed ahead of Powell's speech. The USD index nears seven-month lows with increasing expectations of a dovish Powell in his Friday speech at Jackson Hole. Equity markets tick higher after the S&P posts its longest win streak since November amid bets that the Fed will soon signal it's ready to start cutting interest rates in September. "What we've seen happen is a swath of data, which has eased fears about slowing US growth without stoking fears of reaccelerating inflation," said Rodda, senior market analyst at Capital.com Inc. Elsewhere, the price of a bar of gold is worth a million dollars for the first time. Oil prices edge lower on easing geopolitical risk and slowing China demand. Bitcoin rallies +3%, retesting $61k, silver prices strengthen, and copper prices hold steady. In focus today is the CAD inflation report, while the US economic front is quiet, with markets focusing on the Fed's Bostic and Barr speeches to help provide intraday direction.
In other news. Harris backs a plan to raise the US corporate tax rate to 28%. The search resumes for Mike Lynch and other missing yacht passengers in Italy. US intelligence says Iran was behind the Trump campaign hack. Netanyahu backs ceasefire compromise proposal, says Blinken. Boeing pauses tests of 777X aircraft after finding damage to one of the jet structures. Alaska Airlines and Hawaiian Airlines mergers clear Justice Department hurdle and now faces DOT. Teamsters union serves strike notice to CPKC, CN Rail issues lockout notice. Solar & Wind operations to bring in more than $54 million in tax revenues for Alberta municipalities. EU cuts to 9% of its planned tariff on China-made Telsa EVs.
In currency markets. The Swedish central bank cuts its domestic interest rates by 0.25% and forecasts 2 to 3 more cuts in 2024. Asian currencies and CNY gain momentum, while the USD index remains under pressure ahead of Fed Chair Powell's speech on Friday at Jackson Hole. CNY and Asian hold steady on average against the USD. Trading currencies are mixed, with MXN & ZAR weakening by 0.5%, AUD & NOK flat, JPY firms by 0.1%, CHF & SEK gaining by 0.35%, and NZD strengthening by 0.45% against the USD.
In commodity markets. Oil prices fell by 0.55%, natural gas prices eased by 0.3%, gold prices strengthened by 0.8%, silver prices rallied by 1.5%, copper & wheat prices firmed by 0.2%, and soybean prices eased by 0.2%.
CAD continues to strengthen, climbing to a five-week high amid a softening USD and ahead of the Canadian inflation report today. The loonie is benefiting from the expectation that the US could avoid a recession, the softer USD, and the prospect of a Fed rate cut in September. Today, investors will be focused on the CAD consumer confidence index, which is forecasted to ease to 2.5% y/y in July, down from 2.7% in June. Our bias is to look for USD buying opportunities around current levels; with the prospect of three more BoC interest rate cuts in 2024, we anticipate CAD will remain under pressure into Q4/2024.
EURCAD stalls while the Loonie extends gains ahead of today's key Canadian inflation report.
EUR tests a fresh eight-month high, testing 1.1100 ahead of Fed speakers expected to set the stage for Fed Chair Powell's Friday speech. Momentum continues to support the single currency amid a softening USD heading into the Fed Chair's Jackson Hole speech, where he is widely expected to take a dovish tone and set the stage for a rate cut in September. With the lack of any key US data releases today, investors will be focused on the Fed's Barr & Bostic speeches to help provide intraday direction to currency markets.
GBPEUR extends gains towards 1.1750, but overall, markets are somewhat sidelined with the absence of key economic data releases to provide market guidance.
GBP tests four-week highs, breaching 1.3000 amid a weakening USD. The pound extends a two-week strengthening trend, driven by an increasingly weaker USD as markets increasingly expect the Fed to cut interest rates at its September meeting. The pound is finding additional support from the prospect that the BoE will keep its domestic interest rates on hold in September. Intraday, unless the Fed speakers take an overly dovish or hawkish tone, we anticipate markets will hold within current trading ranges ahead of Friday's Fed Chair speech, the key market event for the week.
For clients based in the European Economic Area, payment services for Payments International Inc. are provided by CurrencyCloud B.V..Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 - 298, Mindspace Nieuwezijds Office 001 Amsterdam.CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of an electronic-money institution (RelationNumber: R142701).
For clients based in the United States, payment services for Payments InternationalInc. are provided by The Currency Cloud Inc. which operates in partnership with Community Federal Savings Bank (CFSB) to facilitate payments in all 50 states in the US. CFSB is registered with the Federal Deposit Insurance Corporation(FDIC Certificate# 57129). The Currency Cloud Inc is registered with FinCEN and authorised in 39 states to transmit money (MSB Registration Number:31000206794359). Registered Office: 104 5th Avenue, 20th Floor, New York , NY10011.
For clients based in the United Kingdom and rest of the world, payment services for Payments International Inc. are provided by The Currency Cloud Limited. .Registered in England and Wales No. 06323311. Registered Office: StewardshipBuilding 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic MoneyRegulations 2011 for the issuing of electronic money (FRN: 900199)
