China reduced the amount of foreign currency deposits banks are required to hold as reserves for the first time this year, in a more visible step to prop up the under-pressure yuan.

Financial institutions will need to carry just 4% of their foreign exchange deposits in reserve starting September 15, the People’s Bank of China said Friday, compared to the current level of 6%. The move effectively boosts the amount of foreign currency available in the local market, making it relatively more appealing for traders to buy the yuan. (Bloomberg - Continue Reading)

The pace of job creation in the world’s largest economy likely slowed this month, and investors will evaluate the latest data to help decide whether the US Federal Reserve is close to stopping its aggressive monetary tightening campaign.

Bureau of Labour Statistics data is set to be released on Friday, and economists polled expect the US to add 170,000 pay rolled jobs on the month compared to 187,000 in July. An in-line read would mark the lowest print in the headline number since April.

HSBC predicted a slightly above-consensus pace in employment gains for August at 175,000. “Businesses still appeared to have strong demand for labour, and initial jobless claims have oscillated upwards and downwards over the past couple of months but remain low by historical standards.”

It warned of drags on the job market. “The Screen Actors Guild and American Federation Of Television and Radio ARTISTS (SAG-AFTRA) strike that commenced in mid-July could have a downward impact on reported payroll employment growth in August.”

Experts noted that the labour market is starting to cool, with Wednesday’s ADP figure showing US companies adding the fewest jobs since March. ADP chief economist Nela Richardson said, “After two years of exceptional gains tied to the recovery, we’re moving towards more sustainable growth in pay and employment as the economic effects of the pandemic recede.” (LiveSquawk - Continue Reading)

The Canadian economy is expected to show a slowdown of momentum in Q2 when the country releases GDP data on Friday, with the quarterly annualised rate to have decelerated to 1.2% from 3.1% in the previous three-month period. An advanced estimate from Statistics Canada signalled that GDP likely contracted by 0.2% M/M in June.

Several analysts noted that the expected slowdown in Q2 could be due to various transitory factors such as wildfires, maintenance on energy projects, and civil servant strikes. With next week’s Bank of Canada rate decision in mind, the preliminary estimate for July growth will garner close attention from traders.

HSBC said, “The slowdown will likely be attributed to the decrease in the rate of growth of household consumption to 1.2% from 5.7% in Q1”. It added that it expects residential investment to rise for the first time in four quarters given the modest rebound in activity in the period. (LiveSquawk - Continue Reading)