CAD makes gains on other major currencies

Key Movers

The US dollar index (DXY) is currently trading at 101.570, slightly below Friday’s close of 101.700 but largely flat. The Chicago purchasing Manager’s Index (PMI) for July was reported at 42.8, below the forecast 43.3. This bearish reading indicates a contraction in the manufacturing industry in the Chicago area. The Dallas Federal Manufacturing Index for July was reported at -20 versus the previous -23.2, showing continued contraction, however at a slower rate for the manufacturing sector in Texas. Labor market data is set to be released this week, with the job openings and labor turnover survey (JOLTS) coming out tomorrow. ADP employment changes will be released on Wednesday, Challenger Job Cuts and initial jobless claims on Thursday, and the unemployment rate on Friday.

The Eurozone area’s annual inflation fell to 5.3% in July, down from 5.5% in June according to the Consumer Price Index (CPI) flash estimate year-over-year. The core CPI flash estimate, which excludes food, energy, alcohol, and tobacco is at 5.5% in July. This is above the expected 5.4%. Falling inflation could be a good sign for the European Central Bank (ECB) as it considers ending its rate hikes. Additional data includes the European flash Gross Domestic Product (GDP) data which was up by 0.3% versus the expected 0.2%, proving stable for the EU. The euro was unmoved by today’s data releases.

UK mortgage approvals were up in June to 55,000, higher than the expected 49,000 mark. Net lending in the UK was also up to 1.8 billion versus the anticipated 1.3 billion, the highest level since April 2018. GBP money supply for June was reported at -0.1, indicating a slight drop in the total quantity of GBP in circulation and deposited in banks. This could indicate that we may see inflation cooling off in the UK. Markets will be awaiting the Bank of England’s (BoE) interest rate decision on Thursday.

The Australian Melbourne Institute’s inflation gauge for July was reported at 0.8%, up from the previous 0.1% showing a considerable increase in the price of goods and services. The Australian private sector credit for June was released at 0.2%, lower than the expected 0.4%. This lower-than-expected private sector credit may indicate a dip in consumer spending.

The New Zealand ANZ bank business confidence data lifted another 5 points in July from -18.0 to -13.1. This is the highest reading since September 2021, indicating the economy is slowing but certainly not halting.

China’s Manufacturing PMI data in July was reported at 49.3, well above the forecaseted 48.9. Non-manufacturing PMI for July was 51.5 versus the forecasted 52.9. July was the fourth straight month of contraction for Chinese PMI data.

Japanese preliminary industrial production was 2% in June, below the forecasted 2.5% but still capping a quarterly gain that suggests a modest recovery in the second quarter. Japanese retail sales year-over-year were also up, coming in at 5.9%, greater than the expected 5.4%. Alongside these stats comes optimistic consumer confidence at 37.1, above the forecasted 36.1.