In terms of central bank activity, Wednesday’s RBNZ and Bank of Canada decisions share top billing with Friday’s US employment report. The RBNZ is expected to deliver a second consecutive 25bp increase, taking the OCR to 2.75%, while the BoC should leave its policy rate at 2.25% as stronger domestic data are weighed against renewed trade tensions and excess capacity.

On the data front, eurozone inflation is likely to rise on Tuesday, strengthening expectations of an ECB hike on 10 September. In the US, the ISM surveys, JOLTS, ADP and the Fed’s Beige Book will build towards payrolls. Australia’s second-quarter GDP report, due at 01:30 GMT on Wednesday, is expected to show subdued growth, with the composition of household spending and business investment likely to matter more than the headline.

G20 finance ministers and central bank governors meet on Monday and Tuesday, while the deterioration in US-Canada trade relations has complicated the BoC's outlook. Middle East developments also remain a source of volatility for oil, inflation expectations and global bond markets. (LS – Continue Reading)

The US and Iran traded attacks as hostilities escalated over the weekend.

American forces struck two Iranian rocket launchers on Larak Island on Sunday after the military said Revolutionary Guard forces were preparing rockets carrying sea mines for launch into the Strait of Hormuz, US Central Command confirmed to MS NOW.

“Earlier today US forces struck two Iranian launchers on Larak Island. Islamic Revolutionary Guard Corps forces were observed preparing to launch rockets with sea mines into the Strait of Hormuz,” Navy Capt. Tim Hawkins, a US Central Command spokesperson, said in a statement. (CNBC – Continue Reading)

US Treasury Secretary Scott Bessent said recent yen moves were "pretty well contained," suggesting the Japanese currency's renewed slides were not seen as the kind of disorderly moves that led to a rare joint Japan-US intervention last month.

The yen slid below the 160-per-dollar level on Friday, a threshold widely seen as increasing the likelihood of intervention, drawing market attention to whether the United States and Japan can step in to prop up the yen again.

In an interview with Reuters on Sunday, Bessent also said he expects Bank of Japan Governor Kazuo Ueda to "do the right thing" on monetary policy with the backing of Prime Minister Sanae Takaichi, when asked whether the central bank should consider consecutive interest rate hikes to combat yen declines. (RTRS – Continue Reading)

China’s factory activity improved more than forecast in August while staying in contraction for a second month, showing glimmers of a pickup for the economy as policymakers eye new measures.

The official manufacturing purchasing managers’ index reached 49.8 from 49.2 in July, the National Bureau of Statistics said Monday. The median estimate of economists surveyed by Bloomberg was 49.5. A reading below 50 indicates contraction. (BBG – Continue Reading)