Dollar Mixed Before PCE 

PCE is the Federal Reserve’s preferred inflation gauge, and economists are expecting the headline year-over-year figure to hold steady at 3.3%. Any surprise in the release is likely to drive price action in the short term. Beyond PCE figures, Traders remain focused on the Jackson Hole Economic Policy Symposium, which will kick off tomorrow, with Federal Reserve Chair Kevin Warsh’s address happening on Friday morning. Chair Warsh’s speech is being watched closely due to the Fed having not clearly signaled their reaction function with regard to inflation. Additionally, Nvidia will release their earnings after the close today, and risk appetite is somewhat subdued ahead of that.

What to Watch This Week…

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CAD

The Canadian Dollar is down against the Buck this morning, near a one-week low, as the potential for a trade war with the United States escalates. U.S. President Donald Trump announced new tariffs on Canadian imports over the weekend, and on Tuesday Canada announced retaliatory tariffs of 15-50% on 700 unique U.S. products, targeting politically sensitive sectors such as seafood and dairy. This kind of tit-for-tat dynamic is putting downward pressure on the Loonie and has some economists believing that it will force a more dovish stance from the Bank of Canada with regard to interest rates.

AUD

The Australian Dollar is the G10’s top performer this morning following the release of Consumer Price Index (CPI) numbers for the month of July overnight. The headline year-over-year figure came in at 3.5% versus the 3.3% expectation, and the trimmed mean year-over-year figure came in at 3.6% versus 3.5% expected. The hotter-than-expected print has reaffirmed rate hike expectations for the Reserve Bank of Australia, with overnight-indexed swaps now pricing in an approximately 80% probability of a hike before year-end.