Investinglive Americas FX news wrap 1 Aug. Jobs weak. Data weak. Tariff high and a firing.

The “major mistake” wasn’t really a mistake but a revision of the data, which happens because of the nuances of the data collection mainly. I spoke to the issues and potential solutions in this post here.

In addition to the US jobs report, the other data was not particularly good. Construction spending was -0.4% versus 0.0% estimate. ISM Manufacturing was lower at 48.0 versus 49.5. Finally, the University of Michigan sentiment dipped to 61.7 from 61.8 preliminary with the 1-year inflation ticking up to 4.5% from 4.4% preliminary but the five year inflation expectations falling to 3.4% from 3.6%.

As if that wasn’t enough, Pres. Trump announced that he was positioning US nuclear submarines in the “appropriate regions”, just in case the foolish inflammatory statements from Russia’s Medvedev are more than just that. I guess it is like sending in the National Guard into LA, but on a bigger scale.

All of that – and the start of the August 1 tariffs with the Canada rate set at 35% and Switzerland set at 39% – led to stocks moving lower. The NASDAQ index fell -2.24%. The Russell 2000 also fell more than -2% with a decline of -2.03%. Major indices also closed lower for the week

US yields did move sharply lower (price’s higher) as result of the weak data with the two-year down -23.7 basis points. The market is pricing in a September cut, with another one scheduled before year’s end. The 5-year yield fell by 20.5 basis points, and the 10 year fell -14.4 basis points to 4.215% – its lowest rate since April 28.

The US dollar did move sharply to the downside with the USDJPY down -2.26% (that was helped by flight to safety into the JPY). The dollar fell by -1.5% vs the EUR and by -1.00% vs the CHF. Versus the other major currencies:

• CAD -0.49%
• AUD -0.65%
• NZD -0.49%
• GBP -0.55%

Atlanta Fed’s GDPNow tracker was revised lower to 2.1% growth for Q3, adding to signs of a slowing economy.

Feds Waller and Bowman explained their decision for the dissent to lower rates (the Fed should move to neutral and not be restrictive) at the FOMC rate decision on Wednesday, and were vindicated by the data today.

Fed’s Bostic kept a stiff upper lip in regard to his projections for one cut in 2025, but acknowledged that the risks were skewed back toward equality for inflation and employment, and that he would have to reevaluate is view given the new data.

Fed’s Kugler announced that she will be stepping down from her position as governor on August 8 which explains her absence “for personal reasons” from the vote on Wednesday. That also gives Pres. Trump the opportunity to appoint a new – more dovish – Fed Governor (Hassett perhaps?).

Meanwhile, European and Swiss officials expressed disappointment over U.S. tariff actions, and the White House confirmed Switzerland refused to make progress on trade barriers.

Eyes this weekend will turn to Sunday’s expected OPEC+ production guidance. Rumors had it that they would increase production by 549,000 BPD. Oil prices moved lower by over $2.00 to $67.25.

Thank you for your support this week. Have a good weekend.