USD

The Dollar is back in the green this morning after dropping 0.2% yesterday as traders gear up for major US data releases throughout the week, starting with tomorrow's GDP and ADP employment reports.

The final US GDP figure for Q2 is expected to confirm that the economy grew by an annualized 2.4% in the quarter, marking the fourth consecutive period of growth. On the other hand, August's ADP employment report is projected to show an increase of 195K jobs, which would be the smallest gain since March.

Meanwhile, the likelihood of another Fed rate hike in November continues to rise. Market pricing this morning indicates a 60% chance of a 0.25% rate increase in November.

EUR

The Euro is slightly lower today following a range of economic reports released from across the Eurozone this morning.

In Germany, the GfK Consumer Climate Indicator for September dropped to -25.5, the lowest level since May. Both income expectations and the propensity to buy declined, while economic sentiment deteriorated to its lowest point of the year.

In France, consumer confidence remained unchanged in August at 85. There is increased pessimism about living standards and personal finances, along with a surge in expectations of price increases over the next year.

Finally, Spain's retail sales increased by 7.3% year-on-year in July, driven by non-food products, especially personal equipment. Additionally, monthly retail trade grew by 0.2%.

GBP

The British Pound has retreated from the day's highs and is marginally lower against the Greenback as London traders return from their holiday.

Yesterday evening, the BRC shop price index revealed that inflation in the UK decelerated to 6.9% in July, marking its lowest level since October 2022. This decline was driven by falling food inflation, particularly for items like meat, potatoes, and cooking oils. Non-food inflation remained stable at 4.7%, while fresh food inflation slowed to 11.6% and ambient food inflation declined to 11.3%. Despite the signs of easing price pressures, the report notes that supply chain risks, such as disruptions in grain markets and poor harvests, continue to pose potential challenges in the battle against inflation.

JPY

The Japanese Yen is facing pressure for the fourth consecutive day, having fallen over 0.3% and now trading at a fresh nine-month low as we approach the North American session.

During the overnight session, Japan's unemployment rate unexpectedly rose to 2.7% in July, marking the highest rate in four months. The number of unemployed individuals increased by 110K, while employment decreased by 100K. Additionally, the jobs-to-applications ratio dipped to its lowest point since July 2022.

Looking ahead, Japan's August consumer confidence index is scheduled for overnight release. It is expected to show a slight uptick to 37.5 from July's 37.1, though it still indicates a lack of confidence among survey participants.

CAD

The Loonie is down by around 0.2% this morning and is trading near its lowest level since late May. With the Canadian calendar empty until Thursday, USD/CAD will be primarily influenced by the upcoming key US data and subsequent movements in the Dollar, as traders aim to assess the Fed's next steps regarding interest rates.

Meanwhile, the BOC is just over a week away from its September interest rate decision, and markets are anticipating the Bank to maintain rates at 5%. However, the recent uptick in inflation may open the door for another surprise BOC hike, similar to what occurred in July.

MXN

The Mexican Peso is down for the second straight day following the latest GDP report from Mexico this morning.

The Mexican economy expanded by 0.8% in Q2, slightly below the expectations of 0.9% growth, but it still marks the seventh consecutive quarter of growth. On a yearly basis, the GDP grew by 3.6%, representing a slight decrease from the previous quarter's 3.7% growth rate.

Meanwhile, Mexico's economic activity grew by 4.1% year-on-year in June, with increased activity across the primary, secondary, and service sectors. On a seasonally adjusted monthly basis, economic activity expanded by 0.5% in June, aligning with market estimates.

BRL

The Brazilian Real is on the back foot this morning, down by around 0.5% against the Greenback as Wall Street gets ready to join the action.

Yesterday, BCB leader Roberto Campos Neto reiterated that the Central Bank would likely maintain a pace of 0.5% per meeting rate cuts, unless there are significant, unforeseen economic changes. Brazil has recently made substantial progress in controlling inflation, prompting the BCB to adopt its current dovish stance.

Looking ahead to tomorrow, Brazil's wholesale and producer price inflation data are set for release at 7:00 AM and 8:00 AM, respectively.

CNY

The Chinese Yuan is down by 0.2% in the offshore market this morning, marking its third-straight day in the red as markets anticipate another round of stimulus, possibly as soon as tomorrow.

According to a Bloomberg report, China's largest banks are preparing to announce rate cuts on most of the country's outstanding mortgages. Additionally, deposit rates are expected to be reduced for the third time in a year as Chinese authorities aim to reinvigorate consumer spending and restore investor confidence in the markets. This move comes as the country grapples with a brewing property crisis and increasing deflationary pressures.

Meanwhile, China's Finance Minister, Liu Kun, reiterated that the government would swiftly implement fiscal stimulus measures as the CCP convenes for its monthly Politburo meeting.