AUSSIE 10-YEAR TECHS: (Z6) Bounce Off Lows

Eagerly awaited inflation reports are later in the week with PPI unusually landing first on Thursday before CPI on Friday. 

• Consensus looks for core CPI to round to 0.2% M/M again in August after the 0.22% M/M in July, with some initial unrounded estimates we’ve seen in a 0.22-0.25% M/M range. Headline CPI inflation is expected to be 0.4% M/M with a bounce in energy prices along with firmer food inflation after a soft July.
• Governor Waller has again had an impact ahead of a CPI release, this time in the opposite direction of the hawkish shift on his reaction function the day ahead of the June CPI release two months ago. He noted that he is "finally seeing some signs of disinflation" in recent data, and that he is inclined to support holding policy in September if August data shows continued progress. While there are some upside risks to inflation, he notes that underlying inflation is "doing better" than core numbers suggest, and wage growth is consistent with inflation returning to the 2% target.
• He wants to give “disinflation a chance” but also noted that it may not take much inflation acceleration to support tighter policy, referring to the potential need for a "small adjustment" to ensure progress resumes. Whilst wanting to not appear data point dependent, he also warned on overly using trends at risk of missing turning points.
• As for core PCE tracking when both CPI and PPI reports are to hand, expect continued additional attention on market-based estimates, stripping out items such as portfolio management fees which have recently been very strong but are due sizeable (very likely downward) revisions with the PCE release at the end of the month.
• Market-based core PCE inflation has moderated to 0.15% M/M in July and 0.18% M/M in June for some rare months back consistent with a 2% inflation target.

Date                 ET        Impact  Event

08/09/2026        0600     **          NFIB Small Business Optimism Index

08/09/2026        0855     **          Redbook Retail Sales Index

08/09/2026        1100     **          NY Fed Survey of Consumer Expectations

08/09/2026        1500     *           Consumer Credit

09/09/2026        0700     **          MBA Weekly Applications Index

09/09/2026        0815     ***        ADP Employment Report

10/09/2026        0830     ***        Jobless Claims

10/09/2026        0830     ***        PPI

10/09/2026        1000     ***        NAR existing home sales

10/09/2026        1000     **          Wholesale Trade

11/09/2026        0830     ***        CPI

11/09/2026        1000     ***        UMich Surveys of Consumers

11/09/2026        1400     **          Treasury Budget

• RES 4: 1.4175 High Jul 13
• RES 3: 1.4129 High Jul 28  
• RES 2: 1.4080 High Aug 4 and 5 
• RES 1: 1.3940 50-day EMA  
• PRICE: 1.3836 @ 16:38 BST Sep 04
• SUP 1: 1.3732 Low Aug 21 and the bear trigger
• SUP 2: 1.3715 76.4% retracement of the May 1 - Jun 24 bull cycle
• SUP 3: 1.3672 Low May 12
• SUP 4: 1.3620 Low May 7

A bear theme in USDCAD remains intact and Wednesday’s reversal reinforces this theme. The move down means resistance at the 50-day EMA, at 1.3940, remains intact. A clear break of the average is required to strengthen any short-term bull theme and signal scope for a stronger retracement of the Jun 24 - Aug 21 bear leg. For bears, attention is on key near-term support at 1.3732, the Aug 21 low.  

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• The week’s main two drivers, certainly of front-end rates, have been a dovish Fed Governor Waller on Thursday before much stronger than expected payrolls growth in August on Friday even if still modest wage growth helped limit the impact of the latter.
• Fed Governor Waller reiterated his reaction function, but his reading of recent data was notable and drove a dovish reaction as he pointed to "finally seeing some signs of disinflation" and that he wants to “give disinflation a chance”.
• He is inclined to support holding policy at this month’s FOMC decision if August data shows continued progress, although it may not take much inflation acceleration to support a tighter policy.
• It was the last major update ahead of the FOMC media blackout and softened the hawkish stance from Fed Chair Warsh the week before at Jackson Hole even if the latter still carries weight.
• Payrolls growth saw a strong beat in August (NFP 162k vs 55k consensus, private 127k vs 50k consensus) along with reasonable upward revisions that limited the extent of the July weakness. The unemployment rate remained at a low 4.1% as expected, as did wage growth at a contained 3.1% Y/Y.
• There were also notable business surveys even if they didn’t elicit much market reaction.
• The ISM manufacturing index was softer than expected in August at 54.6 but still the second highest since 2022 after recent strong increases. Prices paid meanwhile held steady at 71.1 off the recent peak but hold above highs seen in 2025 after tariff announcements, whilst respondents in computer & electronic product sectors note supply chain similarities with the COVID-19 period.
• The ISM services report saw almost a clean slate of upside surprises in August across the headline index and main components, with only employment surprising lower and even then at least increasing on the month. The 55.4 for the overall index is its highest since 56.1 in February (prior to which it was last higher in Oct 2024) after what had been a narrow range of 53.6-54.5 since the start of the US-Iran war.
• The August Beige Book was similar to July’s, with the highlight probably a slight cooling in the price pressures. There was only marginally softer economic activity in terms of the number of Districts reporting slight to moderate growth (still a clear majority).
• External trade details meanwhile revealed a historically strong surge in capital goods imports in July was indeed AI-related.
• Fed Funds futures are back to pricing a 25bp hike on Sept 16 as slightly more likely than not with 14.5bp priced vs 12.5bp after Waller’s remarks.
• The upcoming week’s focus is firmly on PPI (Thu) and CPI (Fri) inflation reports for August. Consensus looks for core CPI to round to 0.2% M/M again after the 0.22% M/M in July, with some initial unrounded estimates we’ve seen in a 0.22-0.25% M/M range, whilst headline CPI inflation could come in at 0.4% M/M with a bounce in energy prices along with firmer food inflation after a soft July.