Canada back at the table

Yesterday's currency recap

After mixed data on Friday, the dollar edged marginally higher in a pretty dull trade. Core PCE numbers came in higher on Friday but personal income and spending came in lower than expected. Stocks continued to charge higher.

Today's GBP rates

Key data points

What we think

Market sentiment is risk-on this morning, after Canada agreed to drop tech tax on companies like Meta and Alphabet in a bid to restart US trade talks. The country is looking to get a deal done by 21 July.

The US dollar is starting the week weaker across the board. With US markets set for a shorter trading week, due to Friday’s Independence Day holiday, the release of non-farm payroll data will be brought forward to Thursday. The data is expected to show a slowdown in job additions - from 139,000 in May down to 113,000 in June. As we are all well aware, the market is still in a dollar selling mood and, barring a big surprise to the upside indicating the US job market is healthy, we anticipate the trend is likely to persist.

Furthermore, we have German CPI numbers this afternoon, followed by EU CPI numbers tomorrow. Markets are only pricing-in one more rate cut by the ECB this year, so any surprise uptick could fade some of this and boost the euro.

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