CAD gains on USD after Friday’s positive labour data

Key Movers

The US dollar index (DXY) dropped -0.54% from Friday’s close to 104.91 ahead of Wednesday’s inflation data release. The US inflation reading is expected to show increased consumer prices by 3.6%, up from July’s reading of 3.2%. Core Consumer Price Index (CPI) data year-over-year is expected to rise 4.3% from the previous reading of 4.7%. The US dollar dropped around 1% against the JPY after the Bank of Japan (BoJ) made the biggest jump against the USD in two months.

Signs of stabilization in the Chinese economy have pushed up the price of oil, currently trading at 87.42. New yuan loans which represent more than four-fifths of all loans in China, were reported at 1,360 billion. This is well above the 1,200 billion forecasted and nearly four times the previous mark of 345.9 billion.

The European Commission presented the Summer 2023 Economic Forecast report which showed a reduced growth momentum for the EU economy. The revised growth forecast was reduced from 1% down to 0.8% in 2023 and from 1.7% down to 1.4% in 2024. Inflation is expected to decline as the Harmonised Index of Consumer Prices (HICP) is projected to reach 6.5% in 2023 compared to last spring’s forecast of 6.7%. Italian industrial production month-over-month was worse than the expected -0.2% decline at -0.7%. The previous three months have seen an average of 0.2% increase in industrial production output, so July saw a notable drop.