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Boston Fed President Susan Collins said on Bloomberg TV that while U.S. growth has shown signs of slowing, the "overall economic fundamentals are relatively solid." She argued policymakers cannot wait until all uncertainty clears before acting and must carefully weigh the Fed’s dual mandate.

She emphasized policymakers "cannot wait until all of the uncertainty is behind us," and must instead weigh both sides of the Fed’s mandate.

"If we start to see worsening labor market risks relative to inflation, starting to dial back the restrictiveness would become appropriate," she said.

The dollar index stood at the front foot and hit three-week high on Friday morning, as improved sentiment on Fed policy outlook continued to boost dollar in past few days.

Initial signals that the central bank may opt for more aggressive policy easing after disappointing July labor data, along with strong downward revisions of June and May numbers, were overshadowed by the latest inflation data which pointed to increased inflationary risk and tempered expectations for rate cuts, with significant drop in bets for widely expected September rate cut, contributing to more cautious approach.

All eyes are on today’s speech of Fed Chair Powell in Jackson Hole symposium, with expectations to get more information about Fed’s action in coming months.

Powell is very likely to put priority on inflationary risk against threats from weakening labor market, which would result in more hawkish stance, however, he may not come with many details as there will be release of another labor report before Fed’s September meeting, suggesting that Powell will be very cautious with his comments in Jackson Hole.

This may result in repeating his standard mantra that the central bank remains on track for policy easing, but any decision will be dependent on the latest economic data.

The dollar is so far on track for strong weekly gain which has retraced the biggest part of losses in past two weeks and about to complete weekly bullish engulfing pattern that would add to developing bullish signals.

Technical picture on daily chart has improved, but bulls started to face headwinds from cracked resistance at $98.73 (50% retracement of $100.04/$97.42 bear-leg, reinforced by falling 100DMA) and nearby daily cloud top ($98.88).

Bullish scenario requires break of $98.73/88 barriers that will signal continuation and expose targets at $99.42 (Fibo 76.4%) and $100 psychological / Aug 1 peak).

Broken Fibo 38.2% ($98.42) reinforced by daily Kijun-sen, marks solid support which should ideally hold and keep bulls intact.

Break here and dip through daily Tenkan-sen ($98.07) will be bearish.

Res: 98.73; 98.88; 99.04; 99.42
Sup: 98.42; 98.30; 98.07; 97.61

Retail sales rose 1.5% month-on-month (m/m) in June, just a tad lower than Statistics Canada's 1.6% advanced estimate.

After adjusting for inflation, the volume of retail sales increased 1.5% m/m.

Unlike in previous months, auto sales were not a major swing factor, with sales edging up just 0.2% m/m after a 1.8% decline in May.

Receipts at gas stations and fuel vendors rose 1.8%, following three consecutive declines. In volumes terms, sales grew an even stronger 2.7% m/m, as lower fuel prices weighed on the nominal gain.

Core sales – excluding auto sales and receipts at gas stations – were solid, rising 1.9% m/m in June. Food and beverage stores led the way (+1.2% m/m) with broad-based gains across most categories. Notably, sales at clothing and clothing accessories stores surged 5.1% m/m, while sales at general merchandise stores climbed 1.8% m/m.

The lone laggard category was furniture and home furnishings stores, which slipped 0.8% m/m.

E-commerce sales declined by 1.7% m/m in June.

Statistics Canada's advanced estimate points suggests that sales pulled back in July, falling 0.8% m/m.

Responses to the supplementary questions showed that 27% of retailers reported being affected by trade tensions, down from 32% in May.

Key Implications

Retail sales matched expectations at the headline level but surprised to the upside in core categories. This indicates that auto-driven gains seen in the spring now lost momentum. On a quarterly basis, real retail sales posted a respectable 3.1% annualized gain with June's strength leaving core sales as the main driver of the topline tally.

Consumer spending held up better than we previously expected and we now see real spending tracking 1.2% in the second quarter (quarter-on-quarter, annualized). However, as the advance estimate indicates, momentum is likely to cool in Q3. With employment growth slowing and trade tensions clouding the outlook, there is little for the average Canadian household to get excited about.

Daily Pivots: (S1) 1.1584; (P) 1.1623; (R1) 1.1646; More...

Intraday bias in EUR/USD remains mildly on the downside as fall from 1.1729 is in progress. Deeper decline would be seen towards 1.1390 support as corrective pattern from 1.1829 extends. On the upside, above 1.1662 minor resistance will turn intraday bias neutral again.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will remain the favored case as long as 1.1604 support holds.

Daily Pivots: (S1) 0.8050; (P) 0.8071; (R1) 0.8109; More….

Intraday bias in USD/CHF remains neutral for the moment. On the upside, firm break of 0.8131 resistance will argue that consolidation from 0.8170 has already completed. Bias will be back on the upside. Further break of 0.8170 will resume the rise from 0.7871 towards 38.2% retracement of 0.9200 to 0.7871 at 0.8379. On the downside, break of 0.8020 support will bring retest of 0.7871 support.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8475 resistance holds.

Daily Pivots: (S1) 147.62; (P) 148.01; (R1) 148.78; More...

Intraday bias in USD/JPY remains on the upside for the moment. Rebound from 146.20 would target a retest of 150.90 first. Firm break there will resume the rise from 139.87 and target 151.22 fibonacci level next. On the downside, below 148.10 minor support will turn intraday bias neutral first.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

Daily Pivots: (S1) 1.3384; (P) 1.3434; (R1) 1.3462; More...

Intraday bias in GBP/USD remains mildly on the downside for the moment. Fall from 1.3594 is in progress for 61.8% retracement of 1.3140 to 1.3594 at 1.3313. Firm break there will bring retest of 1.3140 low. On the upside, above 1.3481 minor resistance will bring retest of 1.3594 first. Overall, corrective pattern from 1.3787 is extending.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3090) holds, even in case of deep pullback.

Dollar is holding broadly firm as markets head into the US session, though intraday momentum has slowed. Traders are reluctant to commit to new positions ahead of Fed Chair Jerome Powell’s highly anticipated Jackson Hole speech.

Expectations for a September rate cut have already been pared back sharply, with Fed fund futures now pricing around a 71% chance, down from over 90% just a week ago. Powell’s remarks will be closely scrutinized for any hint on whether he sees scope for a near-term move, or whether inflation risks still outweigh concerns about labor market cooling.

Market participants are also mindful that Powell’s tone will not be the only driver today. Comments from other Fed officials are expected to hit the wires, helping investors gauge the balance of views across the committee. By the end of the day, markets should have a clearer sense of the prevailing hawkish or dovish leanings inside the Fed.

Still, it must be stressed that today’s speeches are not the final word. Both the August nonfarm payrolls and CPI reports will be released before the next FOMC meeting, and those could easily shift expectations again. Market pricing will therefore remain highly data-dependent over the coming weeks.

For now, the Dollar sits as the strongest performer of the week, trailed by Swiss Franc and Loonie. Kiwi remains the weakest, followed by Aussie and Sterling, while Euro and Yen are trading in the middle of the pack.

In Europe, at the time of writing, FTSE is up 0.08%. DAX is down -0.03%. CAC is up 0.11%. UK 10-year yield is up 0.007 at 4.74. Germany 10-year yield is down -0.013 at 2.746. Earlier in Asia, Nikkei rose 0.05%. Hong Kong HSI rose 0.93%. China Shanghai SSE rose 1.45%. Singapore Strait Times rose 0.52%. Japan 10-year JGB yield rose 0.008 to 1.619.

Canadian retail sales jump in 1.5% mom June, but July seen weakening

Canada’s retail sales climbed 1.5% mom to CAD 70.2B in June, though the gain fell just short of expectations of 1.6% mom. The increase was broad-based, with all nine subsectors contributing, led by food and beverage retailers.

Excluding autos, sales rose an even stronger 1.9% mom, more than doubling forecasts of 0.9% mom, suggesting underlying consumer spending remains resilient.

In volume terms, retail sales advanced 1.5% mom in June, reinforcing that the pick-up was not purely price-driven. On a quarterly basis, sales grew 0.4% qoq, with volumes up 0.7% qoq, pointing to a modest but positive contribution from consumption to Q2 GDP.

However, early signals from Statistics Canada suggest the momentum could be fading. The agency’s advance estimate shows sales likely slipped -0.8% in July mom, raising the risk that strong second-quarter consumption may not carry through into the third.

Eurozone wages growth jump to 3.95%, supports ECB pause

Eurozone negotiated wages accelerated to 3.95% in Q2, up sharply from 2.46% in Q1, the ECB reported on Friday. Though well below the 2024 peak of 5.4%, the acceleration suggests cost pressures remain sticky.

Some analysts noted that much of the gain reflected one-off payments, raising the possibility that the rise is short-lived. Still, with services inflation remaining elevated, policymakers have little scope to accelerate easing after already cutting the deposit rate to 2.00%.

Whether wage growth cools in the coming quarters will be central to determining if the ECB can continue on its path toward looser policy.

Japan core CPI slows to 3.1% as rice inflation cools, but underlying pressures persist

Japan’s inflation slowed again in July, with core CPI (ex-fresh food) easing to 3.1% yoy from 3.3% yoy, slightly above expectations of 3.0% yoy. Headline CPI also dipped to 3.1% yoy. The moderation was driven in part by cooling rice prices, which rose 90.7% yoy after surging 100.2% yoy in June, alongside the reintroduction of energy subsidies. Together, these helped bring core inflation down from May’s 3.7% peak.

However, price pressures remain entrenched. Food inflation excluding fresh items actually quickened to 8.3% yoy from 8.2% yoy. Core-core CPI (ex-food and energy) stayed unchanged, elevated at 3.4%. Energy prices provided some relief with a -0.3% yoy annual decline, the first drop since March 2024, but this was not enough to counter stubborn underlying strength.

For policymakers at BoJ, the data paints a mixed picture: rice and energy are finally easing their grip on consumer prices, but persistently high core inflation highlights why interest rate hikes remain on the table. While inflation is clearly off its May peak, the road back toward the 2% target looks slow and uneven.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3384; (P) 1.3434; (R1) 1.3462; More...

Intraday bias in GBP/USD remains mildly on the downside for the moment. Fall from 1.3594 is in progress for 61.8% retracement of 1.3140 to 1.3594 at 1.3313. Firm break there will bring retest of 1.3140 low. On the upside, above 1.3481 minor resistance will bring retest of 1.3594 first. Overall, corrective pattern from 1.3787 is extending.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3090) holds, even in case of deep pullback.

Canada’s retail sales climbed 1.5% mom to CAD 70.2B in June, though the gain fell just short of expectations of 1.6% mom. The increase was broad-based, with all nine subsectors contributing, led by food and beverage retailers.

Excluding autos, sales rose an even stronger 1.9% mom, more than doubling forecasts of 0.9% mom, suggesting underlying consumer spending remains resilient.

In volume terms, retail sales advanced 1.5% mom in June, reinforcing that the pick-up was not purely price-driven. On a quarterly basis, sales grew 0.4% qoq, with volumes up 0.7% qoq, pointing to a modest but positive contribution from consumption to Q2 GDP.

However, early signals from Statistics Canada suggest the momentum could be fading. The agency’s advance estimate shows sales likely slipped -0.8% in July mom, raising the risk that strong second-quarter consumption may not carry through into the third.

Full Canada's retail sales release here.

Eurozone negotiated wages accelerated to 3.95% in Q2, up sharply from 2.46% in Q1, the ECB reported on Friday. Though well below the 2024 peak of 5.4%, the acceleration suggests cost pressures remain sticky.

Some analysts noted that much of the gain reflected one-off payments, raising the possibility that the rise is short-lived. Still, with services inflation remaining elevated, policymakers have little scope to accelerate easing after already cutting the deposit rate to 2.00%.

Whether wage growth cools in the coming quarters will be central to determining if the ECB can continue on its path toward looser policy.