CAD: Firmer As Trump Pauses 50% Tariff Against Canada, Says Has A Deal

The focus this week will be on June jobs data published on Thursday. It will round out Q2 and given the data is volatile, the quarterly average will be important in gauging labour market trends. The RBA looks deeper than headline unemployment and employment numbers and so hours worked, youth unemployment and underemployment will also be important indicators.

• Bloomberg consensus is forecasting a 15k rise in June jobs after May’s 40.3k, which would result in Q2 job creation below Q1. The unemployment rate is expected to hold steady at 4.4%.
• Westpac’s leading index for June is released Tuesday. The 6-month annualised rate has been signalling growth slowing to slightly below trend in H2 and into 2027 but not a major slump.
• Preliminary July S&P Global PMIs print Friday. The June composite was marginally in growth territory with manufacturing outperforming services, which is likely being pressured by higher inflation and 75bp of monetary tightening this year. Signs of a negative impact from the resumption of US-Iran hostilities in early July will be looked for.
• The RBA Bulletin is published on Tuesday and includes “Listening to Australians: A New RBA Survey of the Public’, which may include some interesting observations. 

NZGBs are 4–5bps cheaper today, with the NZ–US 10-year yield differential widening to +15bps, its highest level since late May, after reaching as low as -10bps earlier this month.

• The 10-year differential had narrowed from around +50bps in late March, when NZ's long-term issuer default rating outlook was revised to negative from stable.
• At around +50bps, the differential was near the top of its two-year trading range.
• Since then, the NZ–US 1Y3M swap spread narrowed by around 100bps, with the 10-year yield differential compressing broadly in line.
• More recently, however, the NZ–US 1Y3M swap spread has widened by around 50bps during July, reflecting lower US rates following softer inflation data and higher NZ rates ahead of tomorrow's Q2 CPI release.
• A simple regression of the 10-year yield differential against the NZ–US 1Y3M swap spread over the past three years suggests the current differential is around 3bps below its regression-implied fair value. 

Figure 1: NZ-US 10-Year Yield Differential

 Source: Bloomberg Finance LP / MNI

Being quite topical Dean who is head of strategic futures at OpenAI wrote a thread on X on his observations and where things might be heading for those interested. https://x.com/deanwball/status/2078133895766114412?s=20

• "I would guess that the Trump Administration will at some point realize that their best strategy here would be to create large amounts of regulatory risk around the use of open-weight Chinese models."
• Ben Hunt replied in the comments: "Good post! Either the USG co-opts open source by putting it on USG regulatory rails and budget authority, or soft bans open source with regulatory FUD. There is no future where open source runs w/out USG control. This is Bitcoin all over again."