- Canadian dollar extends losses as US downplays hopes for trade deal with Canada
- Canadian and US negotiators are expected to meet again ahead of midnight tariff deadline
- Cleveland Fed survey: businesses expect inflation to ease, investment to weaken over the coming year
- Pentagon weighing a smaller US military presence in the Gulf once the Iran war ends – WaPo
- Canadian Dollar comes under renewed pressure as Trump tariff deadline approaches
- Atlanta Fed GDPNow downgrades Q3 growth estimate to 4.03% vs 4.31% prior
- Trump says there are no talks going on, or scheduled, with Iran; US naval blockade remains in full force
- The yen remains under pressure despite intervention
- US July industrial production +0.2% vs +0.3% expected
- US July import prices -0.4% vs +0.1% expected
- Crypto market today: Bitcoin reclaims key price level $64,000, but the recovery still needs proof
- US July housing starts 1.239m vs 1.350m expected
- ADP weekly NER pulse 9.50K vs 8.25K prior
We got a couple of US economic reports today but the highlights have been US-Iran headlines and US-Canada tariff negotiations. In terms of economic data, US housing starts fell to an annualized 1.239 million in July, down 12.4% from June and 13.5% from a year earlier. Single-family starts also declined, while completions dropped 9.1% month-on-month. The weakness was partly offset by building permits rising 5.0% to 1.443 million, suggesting that future construction plans remain firmer than current activity.
US import prices fell 0.4% in July, following a 0.3% decline in June. Lower fuel import prices more than offset higher nonfuel import prices, while export prices fell a sharper 1.3%. Despite the monthly decline, import prices remained 5.9% higher y/y.
US industrial production increased 0.2% in July, matching the pace of manufacturing growth. Mining output also rose 0.2%, while utilities advanced 0.5%. Manufacturing excluding motor vehicles performed somewhat better, rising 0.4%. Capacity utilization edged up to 76.3% from 76.2% in the prior month.
Markets got a bit nervous after US President Trump said that no talks or negotiations with Iran are currently taking place or scheduled, while confirming that the US naval blockade remains in force. Trump also said the Strait of Hormuz is open and operating and that mines had been removed or detonated. Iran, however, continues to maintain that the strait remains closed until demands and conditions are addressed, highlighting the deep disconnect between Washington and Tehran.
The Canadian dollar weakened as markets continued to price the risk of US tariffs taking effect. US’s planned 50% tariffs on Canadian imports are scheduled to take effect on August 19 without a last-minute breakthrough or postponement. The tariff threat has also affected expectations for the Bank of Canada, with markets reducing expectations for further rate increases as trade uncertainty weighs on the Canadian economy.
The loonie eventually bounced toward the end of the session after a Politico report suggested that Trump was weighing whether to grant Canada a tariff reprieve, raising hopes that the planned 50% duties could be delayed or avoided. The move came as US and Canadian negotiators continued last-minute discussions ahead of the midnight deadline, with markets pricing in a greater probability of a compromise.
This article was written by Giuseppe Dellamotta at investinglive.com.