CANADA DATA: Slowdown In Hours Worked Suggests Limited Activity Recovery In July
Aug-08 18:38
A few additional points from July's weak Labour Force Survey:
- Wage growth was a more solid point in the report. Despite a pullback in employment suggesting increasing slack, employee wages rose 3.3% Y/Y, an uptick from June's 3.2% (which was a 40-month low).
- Permanent employee hourly wages unexpectedly rose to 3.5% from 3.2% prior, suggesting that June's pullback was a one-off (this printed 3.5% in each of March, April and May). And though full-time jobs led the overall July decline, full-time average hourly wages rose to 3.6% Y/Y from 3.0% for a 5-month best.
- We would take care when interpreting the wage data which tends to be erratic at best, but it seems more consistent with pre-June data suggesting a slowing from 4+% levels in 2022-2024 though no major decline.
- Perhaps more importantly, the 0.2% M/M pullback in hours worked (unsurprising given the drop in employment) was the first decline since February.
- Just as the 0.5% increase in June suggested a possible increase in monthly GDP (the flash estimate is +0.1% M/M, which would be the first rise in 3 months), the subsequent drop will limit sequential improvement in activity in July.
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FED: More Participants Think Rates May Not Be Far From "Neutral"
Jul-09 18:33
One hawkish note to the a largely unsurprising set of Fed minutes - we took note that "several participants commented that the current target range for the federal funds rate may not be far above its neutral level".
- The last time participants' comments on the neutral level was noted in the minutes was in January's edition, when only "a few" said the same thing - and the Fed funds rate hasn't changed since then.
- While the estimated range of the neutral range is notoriously wide, this shift in language could suggest that participants may be eyeing a slightly higher end-point than they had previously.
- It also adds to this comment from Chair Powell at his congressional testimony last month in which he suggested that the "neutral" level of rates could start in just "a couple" of cuts from here: "If you just look in the rearview mirror and look at the existing data that we've seen, you could make a good argument that it would call for us to be at a neutral level, which would be a couple of cuts or maybe more."
USDJPY TECHS: Continues To Appreciate
Jul-09 18:30
- RES 4: 149.28 High Apr 3
- RES 3: 148.65 High May 12 and a reversal trigger
- RES 2: 148.03 High Jun 23
- RES 1: 147.18 Intraday high
- PRICE: 146.46 @ 16:46 BST Jul 9
- SUP 1: 145.83 Low Jul 8
- SUP 2: 145.02 50-day EMA
- SUP 3: 144.23/142.68 Low Jul 7 / 1
- SUP 4: 142.12 Low May 27 and a key short-term support
USDJPY continues to appreciate and maintains a firmer short-term tone. The latest recovery has resulted in a breach of the 50-day EMA, highlighting a stronger reversal. 146.77, 76.4% of the Jun 23 - Jul 1 bear leg, has been pierced, a clear break of this level would open 148.03, the Jun 23 high. Support to watch is 145.02, the 50-day EMA. A clear breach of the average would be bearish.
STIR: Projected Rate Cuts Steady to Pre-Minutes Levels
Jul-09 18:18
- Projected rate cut pricing has gained momentum vs morning (*) levels: Jul'25 at -1.7bp (-1.2bp), Sep'25 at -18.6bp (-17.3bp), Oct'25 at -33.7bp (-31.7bp), Dec'25 at 52bp (-49.3bp).
