Views

We are less optimistic about the growth outlook, forecasting 2026 GDP growth at 3.2%.

The available ESI and PMI surveys would be consistent with an average GDP growth of around 0.3% q/q in H2 2026.

Statistics Canada’s advance estimate indicated GDP was unchanged in July, suggesting economic activity likely moderated at the beginning of Q3.

Increases in real estate and rental and leasing and professional, scientific and technical services were offset by decreases in retail trade and manufacturing.

We see room for a downtick along the longer end of the CGB yield curve, with additional price return potential coming from anticipated USD weakness.

If the Fed does not raise rates, the dollar could quickly give back its recent gains and EUR/USD could rise towards 1.18.

Barring a fresh surprise announcement on Treasury market intervention, the index can reclaim the 100.0 level.

Still, we’d be very cautious about chasing a dollar correction further this week. In our view, markets would need a string of materially disappointing data releases over the coming days to meaningfully reassess September FOMC expectations after Warsh’s hawkish message last week.

We see NZD/USD trading back below 0.590 in the near term as the RBNZ may fail to meet hawkish expectations and USD finds some support.

European natural gas prices are at the March peaks, keeping the euro’s terms of trade under pressure.

The Czech market is still pricing in almost four rate hikes and the Polish market nearly three, which should limit further weakening and could support gains today given further widening of rate differentials versus euro.

In FX, the US dollar edged slightly higher.

Our fair value BEER model suggests that the MXN is about 21% stronger than what macro fundamentals support.

Falling student numbers suggest a drag from education exports, which is a major services exports category accounting for around 40% of the total services outflow.

But overall they hit about 5% of our exports to the US (ed. even less total) and we don't expect them to be a big effect.

We look for Canada’s trade surplus to widen to $4.2 billion in July from $3.9 billion in June.

Market consensus expects export growth to moderate to 61.4% YoY, from a revised 62.9%

imports are expected to slow to 25.2% YoY, from 26.5%.

Nominal Canadian exports should edge up about 0.1% in July, supported by an increase in vehicle shipments.

We anticipate a 0.3% contraction for imports, driving a surplus expansion.

Howard Lutnick told CNBC that the Trump administration is preparing broader tariffs on semiconductor imports, although companies manufacturing chips in the US could receive some relief.

new U.S. tariffs on about 5% of Canadian exports adding to downside economic growth risks

The latest 50% U.S. tariffs add downside risk, although we expect the effects will be concentrated heavily in specific exposed sectors/products with limited aggregate economic growth implications.

Ebrard stated that Mexico is seeking a reduction in auto tariffs to 15% from 25%, which would be the same level that the U.S. and Canada had reportedly agreed to before talks broke down.

Tariffs on servers would particularly impact Mexico, as these goods have accounted for a large share of the rise in Mexican exports in recent quarters

More than 80% of Canadian exports continue to enter the U.S. duty-free under CUSMA, helping preserve the broader growth backdrop.

The S&P 500 rose 0.5%, the Nasdaq 100 gained 0.2% and the Dow added 0.6%, ending a three-session losing streak as bond yields stabilised and investors returned to beaten-down stocks.

Dell surged 15.8% after lifting its annual revenue outlook to $192 billion on stronger AI-server demand, while Nvidia gained 3.2% as chip stocks rebounded.

The Stoxx Europe 600 fell 0.2%, the DAX lost 0.5% and the FTSE 100 declined 0.3% as elevated bond yields and renewed Middle East tensions kept inflation concerns alive.

Technology and consumer discretionary led declines while energy outperformed.

as rising oil prices, inflation and bond yields pressured equities

The S&P 500 rose 0.7%, the Dow gained 0.2% and the Nasdaq 100 advanced 1.4%, although technology almost entirely drove the rally and the equal-weight S&P 500 fell 0.3%.

Precious metals, led by gold, trade higher for a second day, supported by softer US economic data and lower oil prices, which have helped arrest the rise in bond yields.

Gold and silver have both fallen by more than 4% since Friday as Warsh's speech produced three immediate headwinds: higher short-term rate expectations, rising real and nominal yields, and a stronger US dollar.

Gold has so far retraced only 38.2% of its August rally, which in technical terms is considered a relatively shallow correction within an established uptrend. For that picture to change, prices would need to break below a band of support in the USD 4,200–4,240 area.

Gold therefore remains caught between two opposing forces: the immediate cost of money and longer-term concerns about the quantity and credibility of money.

Gold briefly reached a three-month high near USD 4,700 this week before consolidating ahead of Fed Chair Kevin Warsh's Jackson Hole speech.

Silver has subsequently outperformed gold, while platinum has also participated, reinforcing the impression of renewed investor interest across the precious-metals complex.

The softer-than-expected ADP employment change of 38k, versus expectations of 48k, remains broadly consistent with the "low-hire, low-fire" dynamic in the US labour market.

Employment growth has moderated, reducing the urgency for tighter policy.

Overall inflation-adjusted growth in personal disposable income has ground to a halt (chart 8).

Consecutive large job gains in Canada over the summer, combined with increasingly constrained labour supply from worker retirements and reduced immigration pushed Canada’s unemployment rate down to 6.4% in July.

but we remain cautiously optimistic that per-worker labour markets in Canada will continue to gradually improve, with the unemployment rate edging lower into 2027.

With no resolution to the US-Iran conflict in sight, energy prices remain high and volatile.

Conditions are even tighter in Europe, where diesel has risen above USD 200 per barrel, more than USD 105 above Brent and well above the USD 28 per barrel at which the spread traded this time last year.

higher energy prices pushing up global energy inflation, including in Canada

still-elevated global energy prices as a result of the Strait of Hormuz remaining largely closed

Brent and WTI prices, however, edged lower, settling at USD95.6/barrel and USD91.0/barrel, respectively.

Brent crude oil topped USD 95 after the US-Iran conflict escalated further as American forces launched fresh strikes and Tehran retaliated.

Oil prices are under slightly further upward pressure this morning after surging yesterday because of US-Iran hostilities.