The USD declined by 0.2% yesterday as risk assets rebounded following a significant drop in initial US jobless claims, the largest in nearly a year. This eased concerns about a sharper slowdown in the labor market after last week’s disappointing NFP data shocked markets. The S&P 500 experienced its biggest rally since November 2022, with all major groups in the index advancing. Meanwhile, US 10-year Treasury yields rose for the third consecutive day, briefly surpassing the 4% level. Today, the USD is down 0.15%, trading mixed against its G10 counterparts. Key data releases in the upcoming week include PPI, CPI, and retail sales.

EUR/USD closed marginally lower yesterday, falling as much as 0.6% from overnight highs before recovering to close nearly flat. The pair is trading slightly higher than it was at this time last week, with price action confined to a narrow 0.75% range over the last four sessions. Monthly and yearly German CPI readings met expectations today. Another light week of data lies ahead, highlighted by the eurozone’s preliminary Q2 GDP reading on Wednesday. Swap pricing indicates nearly three rate cuts are anticipated for the remainder of 2024.

GBP/USD rose by 0.45% yesterday and is slightly lower today, trading about 0.75% below last week’s levels. Domestic data will be plentiful next week, with key releases including employment figures on Tuesday, CPI on Wednesday, and GDP and retail sales on Friday. The probability of a rate cut at the BOE’s September 19th meeting is slightly above 40%, with nearly two cuts expected by the end of 2024.

USD/CAD closed 0.2% lower yesterday and is marginally higher today, trading approximately 0.75% below last week’s levels. Canada’s July employment data missed the median forecast of 25k job additions, coming in at -2.8k, with the unemployment rate unexpectedly dropping to 6.4%. A solid increase of 61.6k full-time jobs was offset by 64.4k part-time job losses. Wages rose 5.2% versus a forecast of 4.8%, though this was a decline from the previous month’s 5.6% gain. Additionally, the participation rate unexpectedly fell as the labor force shrank for the first time since September 2022. Youth unemployment surged by 0.7% to 14.2%. Today’s employment data—the last before the BOC’s September 4th rate decision—suggests a gradually cooling labor market. Swap odds imply investors expect three full rate cuts by the end of 2024.