Market News

• Prior was +2.8%
• CPI m/m +0.5% vs +0.4% expected (prior was -0.4%)
• BOC core +0.2% m/m vs +0.1% prior
• BOC core +2.3% y/y vs +2.1% prior
• CPI median +2.0% vs +1.9% expected
• CPI trim +1.9% vs +1.8% expected
• CPI common +2.7% vs +2.6% prior

Canadian inflation has been tracking the rise in oil prices but is insulated somewhat by falling home prices and rents in some parts of the country. The Bank of Canada looks to be firmly in neutral territory at the moment but with the chance of a hike by December rising to 70% and 65 bps of hikes priced in over the next year.

For this report, prices for gasoline grew at a faster rate in July of +25.7% y/y compared with June at +20.5% y/y. In a related move, prices for travel tours rose at a faster pace in July…

The U.S. dollar is starting the new trading week on the defensive, trading lower against all of the major currencies as Friday's weaker U.S. retail sales data continues to reverberate through the markets.

The EURUSD is up 0.18%, while the GBPUSD is higher by 0.19%. The Japanese yen is also modestly stronger, with the USDJPY down 0.05%. The biggest mover is the Australian dollar, with the AUDUSD up 0.62%.

The AUDUSD move appears to be less about fresh Australian news and more about the combination of broad U.S. dollar selling and a relatively hawkish RBA backdrop. Friday's disappointing U.S. retail sales report has traders scaling back expectations for another Fed rate hike. The probability of a September increase has fallen to around 30%,…

Headlines:

• Dollar comes under pressure to start the new week
• Iran reaffirms that talks have not yet begun with the US
• China retail sales disappoint in July, industrial output slows while new home prices extend declines
• China stats bureau says July economic activity affected by extreme weather conditions, among other factors
• No major US data releases but this week will feature a big test on consumer health

Markets:

• AUD leads, USD lags on the day
• European indices mostly a little higher; S&P 500 futures up 0.1%
• WTI crude oil up 0.5% to $82.77
• Gold up 0.6% to $4,402
• US 10-year yields up 1 bps to 4.686%
• Bitcoin up 0.9% to $63,603

It was a quieter session as markets continue to assess the Middle East situation, while also weighing up the Fed outlook ahead…

For the better part of a week already, USD/JPY continues to hover around 158.50 to 159.50 but mostly weaving in and around the 159.00 mark. It is the same case again today, despite a more tepid dollar mood to start the new week. As much as the dollar may be seeing some signs of weakness, the yen is also staying under pressure as the fundamental landscape is unchanged. The only difference now is that there is a more threatening look to the intervention playbook.

As such, that is keeping USD/JPY price action on edge at the moment. Push things too far and closer to 160, and that will risk incurring the wrath of another potential joint intervention play. But all else being equal, the path of least resistance continues to point to a softer yen…

Berkshire Hathaway Starts Putting Its Cash to Work: What Investors Can Learn From Greg Abel's Strategy

Berkshire Hathaway is beginning to use more of its enormous cash reserve. During the second quarter, it bought $23.5 billion of stocks, sold $3.7 billion, and repurchased $4.5 billion of its own shares. This is a meaningful change in direction, but not an aggressive bet that the market can only go higher.

Key takeaways for Berkshire Hathaway investors

• Berkshire became a net buyer: It purchased about $19.8 billion more stocks than it sold, ending 14 consecutive quarters of net selling.

• Capital went into two places: Berkshire bought external stocks and repurchased its own shares, showing confidence in selected opportunities as well as its own…

The UK’s artificial intelligence boom is becoming visible in the country’s economic growth data. Britain’s economy expanded by 0.4% in the second quarter of 2026, slowing from 0.6% in the first quarter but proving more resilient than many had feared. More importantly for investors, the information and communications sector accounted for almost half of the expansion, making it the largest contributor among industries. 

Within the sector, computer programming, consultancy and related activities — areas increasingly intertwined with AI — jumped 3.7% quarter-on-quarter after rising 3.8% in the previous quarter. That suggests something more significant than a temporary technology-sector upswing may be taking place: AI is beginning to reshape…

• No talks have begun with the US
• And they won't because of US violations of memorandum of understanding
• There is no mention of a 60-day deadline in the text of the memorandum of understanding
• Iran will never formulate policies under pressure or time limits
• The agreement stipulated a 60-day period for two main issues
• That being "lifting sanctions" and "nuclear issues", which could be extended
• The violations of the memorandum of understanding mean 60-day timeline became irrelevant

There is plenty of talk about the ceasefire agreement and/or memorandum of understanding expiring over the weekend. Yes, the one that was signed back in late June. But as Iran is making it clear, that 60-day timeline is no longer relevant as it was only after a few weeks…

The slate of July economic data:

• July retail sales +0.6% vs +1.5% y/y expected
• Prior +1.0%
• July industrial output +4.5% vs +4.8% y/y expected
• Prior +5.3%
• July fixed-asset investment -6.7% vs -6.0% y/y expected
• Prior -5.7%
• July property investment -19.2% y/y
• Prior -18.0%
• July new home prices -0.1% m/m
• Prior -0.1%
• July new home prices -3.2% y/y
• Prior -3.3%

Soft numbers all around and they are pretty bad, even for recent bad-news-from-China standards. The deepening declines in fixed-asset and property investments continue to signal that the overall market is struggling hard. And even the supposed one bright spot i.e. retail sales was very much a disappointment. That is despite Beijing's efforts to prop up activity through the likes of consumer trade-in…

The spokesperson of China's statistics bureau is out saying that July economic activity was affected by external uncertainties and also extreme weather conditions, among other factors, amid the poor report here.

Adding that Beijing will step up counter-cyclical policy adjustments and expand domestic demand as part of efforts to bolster economic activity.

It is interesting that they put the timing of the release to right after the market close but then leave it to the statistics bureau to offer up commentary on making effort to improve domestic demand. Typically, you'd see the economy and/or commerce ministry do that. And the timing of the daily briefings do line up, but yeah.

In any case, China will continue to try and talk the talk in…

The week ahead will not feature any major economic data releases in the US. That unless you want to count the Philly Fed manufacturing index and the weekly jobless claims report. But even so, there will be a lot of focus on what is happening in the US - in particular Wall Street.

After big tech earnings helped to salvage things in the first half of August, it's now over major retail giants to take over next. And this will offer much insight on the overall health of the US consumer with discretionary spending and/or inflation fatigue coming under heavy focus.

Here's the list of names to note:

• 18 August (Tuesday): Home Depot
• 19 August (Wednesday): Target, Lowe's, TJX
• 20 August (Thursday): Walmart

As usual, Walmart will be the main one to watch on…

There is perhaps just one to take note of on the day, as highlighted in bold below.

That being for USD/JPY at the 159.00 level. But as mentioned before with expiries for the currency pair, it is all about intervention risks right now.

The psychological game is what is dictating the narrative for USD/JPY and that isn't going to change this week. Sure, the dollar is on the softer side and may be running into a bit of trouble as noted here. However, the yen's plight is also still being prolonged amid a lack of change in the fundamental drivers.

So among all dollar pairs, USD/JPY is one that is least likely to benefit from any dollar pullbacks.

While buyers are continuing to poke and prod, they aren't going too far to pushing the agenda in…