The dollar ended last week on a weak note, and continued selling today drove it lower against almost all G10 and emerging market currencies. Just as some analysts were discussing a resurgence in yen carry trades, the yen appreciated significantly. A weaker dollar and lower yields helped push gold to a new record high of nearly $2,510 today before consolidating. October WTI crude is trading about 1% lower, close to last week's low set before the weekend.

Asia Pacific Markets
The Japanese economy grew at an annualized rate of 3.1% in Q2 after a contraction of 2.3% in Q1, although it ended the quarter on a weak note. Industrial output dropped by 4.2% in June, and the tertiary activities index fell by 1.3%.
Minutes from the recent Reserve Bank of Australia meeting are expected tomorrow, but Governor Bullock's comments to a parliamentary panel before the weekend likely indicated the general direction: it is too early to consider a rate cut.

As talk of the return to carry trade strategies circulated, the yen surged more than 1% before the weekend, marking its largest gain in nearly two weeks.
The Australian dollar reached a four-week high near $0.6670 ahead of the weekend, overcoming resistance around the $0.6640-45 area that had previously hindered its recovery. Continued buying has seen the Aussie approach $0.6700 today.

European Markets
The key economic data point this week is the flash PMI for the eurozone and the UK. The euro finished last week slightly above $1.1025, marking its best settlement since January 1, according to Bloomberg. The euro rose 1% last week, achieving its third consecutive weekly gain. The currency pushed against $1.1050 in early European trading before stalling. Sterling closed last week at $1.2945, its highest close since the year's high on July 17. It had faced resistance around $1.2870, but broad dollar weakness helped it overcome this level, which may now act as support. Speculators in the futures market cut sterling long positions for the third week, resulting in a cumulative liquidation of approximately 95,000 contracts, or about $7.6 billion in notional value.

American Markets
In his upcoming speech at Jackson Hole, Fed Chair Powell is likely to present the forthcoming rate cut not as a policy easing but as a shift to a less restrictive stance, given that the economy is no longer overheating. He has previously dismissed concerns about stagflation, arguing that neither component of the term—stagnant growth and high inflation—applies. Price pressures are moderating, and the economy is not stagnant.

This week, Canada's highlight is the July CPI report. The US dollar fell to almost CAD 1.3675 before the weekend, its lowest level in about a month, and tested support near CAD 1.3660 today.