The US dollar is showing weakness against all G10 currencies today. Leading the pack is the New Zealand dollar, suggesting a potential resurgence of carry trades. Interestingly, the yen and Swiss franc are also performing strongly. Meanwhile, Asia Pacific and European shares have traded higher, with US index futures remaining relatively unchanged.
Lower interest rates and a weaker dollar have bolstered gold, which has risen nearly 1.5% this week. September WTI briefly exceeded $80 earlier in the week but has since dropped to new weekly lows.

Asia Pacific Markets
Weekly data from the Ministry of Finance revealed that Japanese investors are still actively buying foreign bonds. Looking ahead, the economic calendar will be quieter next week, with notable releases including the flash August PMI for both Japan and Australia. Japan will also report its July trade balance. Despite the yen being significantly undervalued, Japan continues to run a trade deficit.
The recent increase in US interest rates, following strong US retail sales and weekly jobless data, pushed the US dollar to a nine-day high near JPY149.30. However, the dollar has softened today and is testing the JPY148.25 level in early European trading.
Meanwhile, the Governor of the Reserve Bank of Australia has dismissed speculation of a rate cut this year, which has bolstered the Australian dollar. It is now poised to challenge the $0.6650 level, potentially leading to further gains.

European Markets
The eurozone reported its June trade figures today, which serve as a reminder that the regional trade balance has recovered.
The euro, showing resilience, initially fell following stronger US data but has since recovered to the $1.0990 area, trading within a $1.0970-90 range today.
Additionally, the British pound has pushed above $1.29 for the first time in three weeks, marking the 61.8% retracement of losses since the July 17 high.

American Markets
The stronger-than-expected July retail sales and the second consecutive decline in weekly jobless claims highlight the resilience of the US consumer. This has led the market to scale back earlier speculations that the Federal Reserve would begin its easing cycle next month with a half-point rate cut. For the first time in two weeks, the market has discounted less than 100 basis points of easing for this year.
Next week’s calendar includes the FOMC minutes, the flash PMI, and new and existing home sales. Fed Chair Powell’s presentation at Jackson Hole is expected to provide further guidance on the likelihood of a rate cut next month.

Canada is set to report July housing starts and June portfolio flows today, though these releases typically do not elicit strong market reactions.