U.S. August Consumer Confidence Rises Slightly But Consumers Show More Concern About the Labor Market

Economic

Data Interpretation

Summary:

The U.S. consumer confidence index rose to a six-month high of 103.3 in August, up from 101.9 in July, as consumer optimism about the economy and inflation offset concerns about the labor market, according to data from the Conference Board.

The latest Conference Board Consumer Confidence Index report for the U.S. was released on 27 August:

The Conference Board Consumer Confidence Index rose in August to 103.3 from an upwardly revised 101.9 in July, while the expected reading was 100.7.

The Present Situation Index improved to 134.4 from 133.6.

The Expectations Index also improved in August to 82.5 from the previous 78.2.

Overall consumer confidence rose in August but remained within the narrow range that has prevailed over the past two years. Compared to July, they were more positive about business conditions, both current and future, but also more concerned about the labor market.

Consumers' assessment of their Family's Current Financial Situation weakened further in August. However, consumers' assessments of current business conditions were more positive in August. 20.8% of consumers said business conditions were "good," up from 19.2% in July. 17.7% said business conditions were "bad," down from 18.2%.

The average 12-month inflation expectation dropped to 4.9% in August—the lowest since March 2020- and is consistent with slower overall inflation and declines in some goods prices.

Consumers' assessments of current business conditions were more positive in August. Nevertheless, their appraisals of the labor market deteriorated in August. 32.8% of consumers said jobs were "plentiful," the lowest rate since March 2021, the 6 consecutive monthly decline. More consumers said jobs were "hard to get".

Buying plans for cars and big-ticket appliances declined in August compared to July. Consumers' willingness to buy homes also remains weak due to high property prices and borrowing costs.

However, as the Fed is likely to start the long-awaited interest rate cut next month, consumer confidence will be boosted, and their spending will be kept on track.

August Consumer Confidence Survey

To stay updated on all economic events of today, please check out our Economic calendar

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Cohen

Political

Donald Trump has added former Democrat Robert F. Kennedy Jr. to his transition team as the former president faces a revised federal indictment alleging he tried to illegally overturn his 2020 election loss.

Kennedy made crypto and Bitcoin (BTC) a central campaign issue during his first bid for the United States presidency as a Democratic candidate. He then switched to run as an independent before suspending his campaign on Friday, Aug. 23, and endorsing Trump.

Tulsi Gabbard — an ex-Democratic Representative and 2020 presidential candidate who is a one-time crypto holder — was also added to Trump’s team.

“As President Trump’s broad coalition of supporters and endorsers expands across partisan lines, we are proud that Robert F. Kennedy Jr. and Tulsi Gabbard have been added to the Trump/Vance Transition team,” Trump campaign senior adviser Brian Hughes told Reuters on Aug. 27.

Kennedy would “help pick the people who will be running the government” if Trump wins the November elections, he explained to ex-Fox News host Tucker Carlson in an interview on Aug. 26, where he revealed he was asked to join Trump’s team.

Trump, the Republican nominee, is lagging behind Vice President and Democratic nominee Kamala Harris by 3.4 percentage points in national polls, according to Aug. 27 FiveThirtyEight data.

Kennedy was polling at 4.6% before he suspended his campaign.

New indictment for Trump

Meanwhile, Trump is facing a fresh federal indictment from a grand jury in Washington, DC, alleging he illegally tried to overturn the results of the 2020 presidential election.

The superseding indictment filed on Aug. 27 lays out four charges federal prosecutors first pinned on Trump last August: Conspiracy to defraud the US, conspiracy to obstruct an official proceeding, obstruction of — and attempt to obstruct — an official proceeding, and conspiracy against rights.

Related: US Democrats are ‘increasingly gravitating towards crypto’ — Poll

The revised indictment focuses on Trump as a candidate and citizen rather than being the incumbent president at the time after the US Supreme Court ruled in July that Trump had “at least presumptive immunity from prosecution for all his official acts” as president.

Trump posted to his Truth Social platform to claim US Special Counsel Jack Smith “rewrote the exact same case in an effort to circumvent the Supreme Court Decision.”

He had pleaded not guilty to the original indictment and added in his post that “the whole case should be thrown out and dismissed on Presidential Immunity grounds.”

Source: COINTELEGRAPH

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SAXO

Economic

Central Bank

Why is the CAD Rallying?

Fed’s Rate Outlook

At the Jackson Hole conference, Federal Reserve Chair Jerome Powell hinted that rate cuts might begin as early as September, with a particular focus on the worsening labor market. He also left the door open for a potential 50bps cut, which has significantly weakened the USD. This has fueled gains across all G10 currencies, including the CAD. Since early August, when the U.S. July jobs report bolstered the case for Fed easing, the USD has experienced notable weakness. Although the CAD has benefited from this, it still trails behind other G10 currencies.

Short Covering

The CAD rally is partly driven by a wave of short covering. Positioning data from the Commodity Futures Trading Commission (CFTC) indicates that the net short position in Canadian dollar futures may have reached record levels in late July. Traders had heavily shorted the CAD, anticipating a divergence between the easing cycles of the Federal Reserve and the Bank of Canada. The BoC has already cut rates twice this year and is expected to continue easing, while the Fed’s actions were seen as more uncertain.

However, as the U.S. dollar weakened and the CAD began to rise, these short positions became increasingly untenable. Traders who bet against the CAD were forced to unwind their positions, leading to a sharp reversal. This has been evident in the CFTC positioning update for the week of 20 August where net short positioning in CAD dropped from $14bn in the week of 30 July to $12bn. This process, known as short covering, has added considerable momentum to the CAD’s recent strength.

Higher Oil Prices

Rising oil prices are boosting the loonie, thanks to Canada's substantial oil export revenues. This week, crude oil has gained fresh momentum due to escalating tensions in the Middle East and potential supply disruptions in Libya. Additionally, the Fed’s rate cut outlook has led markets to anticipate that US demand won't collapse.

Risks to the Rally

Bank of Canada’s Rate Cuts

The Bank of Canada (BoC) may cut rates more aggressively than expected. The market anticipates the BoC will lower its benchmark rate to 4.25% in September, with further reductions potentially bringing it to 3% by next July. Such cuts could undermine the CAD’s rally by narrowing yield differentials.

Technical Indicators Pointing to Oversold Levels

USDCAD is trading far below its 200-day moving average. The bearish tone has seen the USDCAD pair hit lower lows and breaking below its lower Bollinger Band, pushing deeper into oversold territory. This technical setup suggests the potential for a correction or at least a pause in the rally.

Risk Taking Could Remain Limited

With ongoing global uncertainties, risk appetite could remain subdued, limiting the loonie’s upside potential. Concerns about global economic growth, geopolitical tensions, and the Fed's monetary policy could make investors cautious, dampening demand for risk-sensitive assets like the CAD.

Scope for USD Correction

The CAD has lagged in month-to-date gains against the USD, and the recent USD selling may have gone overboard. With the USD looking structurally cheap amid lingering geopolitical uncertainties, weaker global growth prospects, and the uncertain outlook for the US elections, a USD recovery could hurt the CAD. Yield differentials suggest that the CAD could be the most vulnerable currency in the G10 FX space if the USD strengthens.

What to Watch

Canada’s Payroll Employment Report (Thu):

This report will offer insights into Canada’s labor market, a crucial factor for BoC rate decisions. Watch for any signs of moderating wage growth alongside headline job growth, as this could influence BoC's policy trajectory.

Canada’s GDP Data (Fri):

The GDP data will be critical in assessing the health of the Canadian economy and will impact both BoC policy and CAD performance. A significant miss on Q2 GDP growth could increase pressure on the BoC to consider a larger (50bp) rate cut, although such a move remains unlikely given ongoing inflation risks.

US Data Releases:

Key U.S. economic reports, including PCE (Aug 30) should be closely monitored for potential shifts that could affect USDCAD.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Alex

Woolworths, Australia’s largest supermarket chain, reported an annual profit in line with estimates on Aug 28 and declared a special dividend, but said it expects customers to remain cautious amid heightened cost-of-living pressures.

Woolworths grapples with declining performance in key divisions amid inflation-induced margin pressures and escalating operational costs, while intense competition has made it hard for the grocer to adapt to evolving consumer trends.

The grocer slashed prices and passed on lower costs to customers to address the rise in competition and tackle cross-shopping trends.

Consequently, inflation in its food businesses and BIG W segment moderated significantly in the second half and item growth slowed, leading to cooling sales momentum.

The grocer logged total group sales of A$67.92 billion (S$60 billion) for the year, compared with A$64.29 billion in fiscal 2023.

Sales momentum in fiscal 2025 has continued to improve across the group, Woolworths said, with sales in its biggest earner, Australian Food, up about 3 per cent in the first eight weeks.

“Looking ahead, improving customer scores, item growth, and lower inflation provide reason for optimism,” outgoing CEO Brad Banducci said in a statement.

“However, we also know that our customers remain under significant mortgage and rent-related financial stress and anticipate them to remain cautious with the trading environment expected to be challenging for the rest of the financial year.”

The company posted a net profit after tax before significant items of A$1.71 billion for the year ended June, flat compared to the prior year and largely in line with a Visible Alpha consensus estimate of A$1.72 billion.

The Sydney-based company also declared a final dividend of 57 Australian cents per shares, compared with 58 cents a year earlier.

It also declared special dividend of 40 Australian cents per share.

Source: Straits times

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Samantha Luan

The government plans to supply a record amount of 170,000 tons of high-demand foodstuffs and provide a discount worth 70 billion won ($52.69 million) for the upcoming Chuseok holiday, the finance ministry said Wednesday.

They are part of a set of measures meant to better support the livelihoods of the people and to curb inflation ahead of the major traditional holiday, which also call for providing financial support to small and midsized companies and micro business owners.

According to the plan, the government will supply 170,000 tons of key holiday-related foodstuffs, a record amount, including cabbages, apples and pears, to help stabilize their prices.

Demand for vegetables, eggs and other foodstuffs usually rises in South Korea ahead of the holiday as people prepare holiday meals for family gatherings.

It will extend the tariff-rate quota scheme for 10 kinds of imported fruits, including bananas, mangos and pineapples, through the end of the year to lower tariffs and stabilize their prices.

The move will come under the country's flexible tariff system, where the government temporarily adjusts basic tariff rates on imported goods to stabilize prices and protect domestic producers.

A record amount of 70 billion won will be earmarked to support a discount of major agricultural and fisheries products for Chuseok.

A governmentwide task force will be set up to check prices of key items on a daily basis.

The plan also called for extending 43 trillion won of loans and other financial support to small and medium-sized enterprises.

The government will provide a discount on electricity bills for self-employed people with small businesses.

In July, consumer prices, a key gauge of inflation, rose 2.6 percent on-year, picking up pace from a 2.4 percent increase a month earlier, on high prices of fruits and petroleum products.

The government has said that the country is projected to reach the target rate of 2 percent by around the end of 2024, though prices are forecast to ease at a slower pace than earlier expected. (Yonhap)

Source: Koreatimes

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Kevin Du

Commodity

Economic

The Gold price (XAU/USD) gains traction above $2,500 per troy ounce on Wednesday, bolstered by the escalating geopolitical tensions in the Middle East. Additionally, US Federal Reserve (Fed) Chair Jerome Powell's speech at the Jackson Hole symposium last week, signalling “time has come” to begin lowering interest rates, supports the precious metal as it reduces the opportunity cost of holding non-interest-paying assets.

Investors will take more cues from the Fed's Christopher Waller and Raphael Bostic speeches on Wednesday for some hints about the US interest rate path. The attention will shift to the preliminary US Gross Domestic Product (GDP) Annualized for the second quarter (Q2) and Personal Consumption Expenditures (PCE) - Price Index data, which will be published on Thursday and Friday, respectively. The better-than-estimated outcomes could lift the US Dollar (USD) and cap the upside for the USD-denominated Gold price.

Digest Market Movers: Gold price remains strong near the record-high

Thousands of troops from special units mobilized for a large-scale operation in the northern West Bank, which is anticipated to take several weeks. The report said the army has conducted the largest military operation in the West Bank since 2002, and the operation will continue for several days.

“The prospect of falling interest rates is also attracting investors. According to Bloomberg, Gold ETF holdings rose by 15 tonnes last week to the highest level in six months. Speculative interest is particularly strong. The net long position of speculative investors rose to around 193,000 contracts in the week to August 20th, at the same time as Gold hit an all-time high, its highest level in almost four and a half years,” noted Commerzbank’s commodity strategist Carsten Fritsch.

The Conference Board's US Consumer Confidence Index improved to a six-month high, rising to 103.3 in August from an upwardly revised 101.9 in July.

The US Housing Price Index declined by 0.1% MoM in June, below the market consensus of a 0.2% increase, the Federal Housing Federal Agency showed Tuesday.

According to the CME FedWatch Tool, the rate futures markets have fully priced in a 25 basis points (bps) rate cut in September, while the possibility of a deeper rate cut stands at 34.5%. Traders see 100 bps Fed easing this year.

Source: FXSTREET

To stay updated on all economic events of today, please check out our Economic calendar

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ACY

Commodity

Central Bank

Global financial markets started the week on a more cautious note as the optimism that followed the recent Jackson Hole conference began to fade.The U.S. Dollar weakened, signalling that investors were growing more concerned, while stock markets took a hit. This shift in mood underscores just how fragile market confidence can be, with new risks quickly shaking investor sentiment. Several factors contributed to this more guarded outlook, including rising geopolitical tensions and big swings in commodity prices, particularly in the oil sector.

A major event driving this change was a sharp rise in oil prices. Brent crude, the global benchmark, jumped by about 4%, reaching roughly $81 per barrel. This increase is directly tied to the situation in Libya, a key player in the global oil market. The eastern faction of Libya’s government announced a complete halt in crude oil production and exports due to an ongoing leadership dispute within the central bank. With Libya producing around 1.2 million barrels of oil per day, this disruption has raised fears of supply shortages, pushing prices higher and adding another layer of uncertainty to the global economy.

Geopolitical Tensions and Oil Markets Impact Global Financial Sentiment_1

In the Middle East, geopolitical tensions have also heightened, adding to the unease in financial markets. Israel’s pre-emptive strike on thousands of Hezbollah missile launchers has sparked concerns about a wider conflict in the region. Although the situation has calmed slightly since the strike, the risk of further hostilities is still significant. The Middle East is crucial for global energy supplies, and any prolonged conflict could have major impacts on both oil prices and overall market stability.

On top of these geopolitical worries, recent economic data from the U.S. has also influenced market behaviour. Mary Daly, President of the San Francisco Federal Reserve, echoed the cautious tone set by Federal Reserve Chair Jerome Powell at the Jackson Hole conference. Daly suggested that while adjustments to policy might be needed in the future, it’s still too soon to say how or when these changes should happen. Despite some weaker U.S. economic indicators, like a drop in durable goods orders, the job market has stayed strong. This suggests that while the U.S. economy is facing challenges, it’s not on the verge of a major downturn.

As the week goes on, investors will be keeping a close eye on a series of upcoming economic reports that could shed more light on the global economic outlook. Key data releases include U.S. consumer confidence numbers and industrial profit reports from China. These reports will be crucial for gauging the health of the global economy, especially given the ongoing geopolitical uncertainties. Investors will be on the lookout for any signs of weakness that might lead central banks to rethink their monetary policy strategies, particularly in the current fragile market environment.

While the initial response has been one of caution, the evolving nature of these risks means that market conditions could change quickly.Investors will need to stay alert, as the interaction between these factors could have significant consequences for market dynamics in the coming weeks.

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