Exaggerated

Apple lost almost $200bn in market valuation in just two days on the news that China would ban iPhone usage in government offices and state-backed companies. Of course, China is one of Apple’s biggest markets; the company makes roughly a fifth of its revenue from China and it would be a shame to lose market share in such a huge marketplace, but the market has certainly overreacted to the latest news, because Chinese government staff could already not show up at work with their iPhones.

Canadian Dollar Steady Ahead of Jobs Report

The Canadian dollar is steady on Friday in what should be a busy day. In the European session, USD/CAD is trading at 1.3670, down 0.12%. Canada releases the August job report later today, with the markets braced for a decrease of 6,400 in employment.

Euro Edges Higher, German CPI Unchanged

The data calendar is light on Friday and EUR/USD is trading at 1.0707 in Europe, up 0.09%. There are no tier-1 events out of the eurozone or the US, which means we can expect subdued movement from the euro for the remainder of the day.

Sunset Market Commentary

Today’s empty eco calendar left plenty of room to further digest the PBOC’s regime shift in CNY fixings. They turn more tolerant to a weaker currency given the cyclical and structural headwinds the economy is facing. USD/CNY trades at the highest level since end 2007 (7.34). USD/JPY (147.40) is not impressed by Finance Minister Suzuki’s verbal intervention warning.

Crypto Sellers Losing Patience

It looks like sellers in cryptocurrencies are losing patience. The crypto market remains tightly pinned at $1.04 trillion in capitalisation. An attempt to break away and cross the $1.05 trillion mark has been met with heavy selling, and it’s well below the $1.1 trillion pivot late last month.

RBA Set to Stay on Pause as Inflation and Economy Cool

The Reserve Bank of Australia will decide on interest rates on Tuesday (04:30 GMT), likely keeping them on hold for the third straight month. One reason for the RBA’s increased caution lately is weaker economic growth. GDP data due on Wednesday (01:30 GMT) will reveal whether growth remained sluggish or improved in the second quarter. The Australian dollar is vulnerable to further losses amid mounting worries about China on top of a less hawkish RBA.

Bank of Canada to Pause Rate Hikes Ahead of Key Jobs Data

We expect the Bank of Canada to move back to the sidelines Wednesday, foregoing another interest rate hike. But it’ll keep its options open in case more increases are necessary down the road.

The Weekly Bottom Line: Soft GDP Data Take Pressure off BoC

And just like that, concerns about the need for another Bank of Canada (BoC) rate hike have cooled substantially. Payrolls and GDP data that show the economy coming off the boil, reflect a year and a half's worth of rate hikes doing their job to cool economic momentum. The job's not quite done yet, but with the data coming in soft this week, the BoC can feel better about how far they've come in reaching the target state.

Weekly Economic & Financial Commentary: What Is the Yield Curve Saying about Recession?

Many financial market indicators seem consistent with the rising odds of a soft landing. The S&P 500 is up nearly 18% year-to-date, and corporate bond spreads have narrowed since the start of the year. However, one market indicator continues to flash some warning signs about the economic outlook: the shape of the yield curve.

EUR/USD Remains at Risk of Losing Trend Channel

Despite a slightly weaker USD this morning, EUR/USD remains at risk of losing the trend channel. We are looking at 1.0735 first in case of a break today. That said, we wouldn’t draw too many technical conclusions from it before it gets confirmed. Attention later this week shifts to the ECB’s consumer inflation expectations survey and the RBA (tomorrow) & the US services ISM, the Bank of Canada and BoE governor Bailey’s parliamentary testimony on Wednesday.