- Canada July CPI 7.6% y/y vs 7.6% expected
- BOCs Macklem: Inflation in Canada has come down a little, but it remains far too high
- US July housing starts 1.446M vs 1.540M estimate
- Germany to extend the life of its last three nuclear plants - report
- Germany denies report on keeping nuclear plants open
- EU sees Iran's reply to nuclear deal as 'constructive'
- US July industrial production +0.6% vs +0.3% expected
- Atlanta Fed GDPNow Q3 cut to 1.8% from 2.5%
Markets:
- WTI crude oil down $2.85 to $86.56
- US 10-year yields up 1.7 bps to 2.81%
- S&P 500 up 8 points to 4305
- Gold down $3 to $1775
- CAD leads, NZD lags
The dollar was sizzling as US traders arrived but that was the peak. There wasn't anyting in particular that reversed it but TTF gas prices cooled off on a report that Germany will keep nuclear power plants running. It was later denied but that broke the fever.
The risk mood also bucked the selling in equity futures before the open once again. Stocks eventually made a strong move higher but the S&P 500 stalled just ahead of the 200-day moving average. Meme stock mania is also back and BBBY rose 80% before giving most of it back late.
Yen crosses were the big movers on the day in a reversal of the post-CPI move in USD/JPY. We'll get the Reuters Tankan later as Japan navigates inflation and covid in its own way.
The highlight though will be the RBNZ cash rate decision. NZD was weak ahead of that as buyers cover positions but there was a modest bid in the back half of the US session.
CAD was curiously strong given the drop in oil. Some of that was natural gas setting a new closing high for the cycle and the positive risk mood. The CPI report was in line with estimates but some core measures were hot along with services and that might have the market believing the BOC will be more aggressive.
