The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0643 GMT - The dollar recovers slightly after reaching a seven-week low Friday following an unexpected decline in U.S. nonfarm payrolls. Payrolls fell 23,000 in July, although the unemployment rate dropped to 4.1%. The softer jobs data reduce the urgency for the Federal Reserve to raise interest rates in the near term. However, with labor market slack only gradually increasing, focus now turns to Wednesday's U.S. inflation data, Deutsche Bank analysts say in a note. Meanwhile, a top Iranian official laid out tough demands for opening the Strait of Hormuz, and the United Arab Emirates said Iran launched a missile attack on one of its ships. The DXY dollar index rises 0.1% to 99.675 after reaching as low as 99.403 Friday. (renae.dyer@wsj.com)
0640 GMT - U.S. Treasury yields fall slightly after Friday's nonfarm payrolls data came in well below expectations, dampening prospects of the Federal Reserve raising interest rates in September. "Friday's surprisingly negative nonfarm payrolls figure is still sinking in," Commerzbank's Hauke Siemssen says in a note. U.S. money markets are now pricing a below-50% chance of the Federal Reserve raising rates in September, with focus turning to U.S. inflation data on Wednesday. Moves are limited, however, due to continued uncertainty surrounding U.S.-Iran talks to reopen the Strait of Hormuz. Bond markets "remains jittery" as a result, Siemssen says. The ten-year Treasury yield falls 0.8 basis points to 4.650%, Tradeweb data show. (jessica.fleetham@wsj.com)
0628 GMT - Finding the Australian property market's pulse has been difficult in recent months, but there are still vital signs. The preliminary auction clearance rate across the combined capitals rose to 55.1% last week, the highest in 11 weeks, after a low of 47.4% for the week ending June 21, says property research group Cotality. Despite this improvement, clearance rates remain well below the decade average of 68%, it adds. The property market might get some more good news on Tuesday, when the Reserve Bank of Australia likely leaves interest rates unchanged. (james.glynn@wsj.com; @JamesGlynnWSJ)
0624 GMT - The hurdle for another hike by the Reserve Bank of Australia is high at Tuesday's policy meeting, says Mary Jo Vergara, senior economist at RBC Capital Markets. Data to date have not cleared it and won't in the near future, she adds. The RBA will revise its economic forecasts, which will likely show an improved inflation outlook alongside weaker employment and dwelling activity projections, Vergara says. RBA Gov. Michele Bullock's press conference will also likely repeat the hawkish message that it's too early to call victory on the fight against inflation, she adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)
0601 GMT - Rapid growth in government spending in Australia has been a contentious issue amid claims it has put upward pressure on interest rates. However, Tony Kelly, head of international economics at NAB, says that even when state government spending is added to federal spending, the estimated fiscal impulse in the economy for 2026-27 is neutral. He expects a modest fiscal tightening between 2027-29 and 2029-30, but adds that there is a risk that it isn't realized. Budget projections point to public sector infrastructure spending peaking in 2026-27, but the peak has been incorrectly projected many times in the past, he says. (james.glynn@wsj.com; X @JamesGlynnWSJ)
0508 GMT - China's consumer-price index is likely to remain weak in the near term, according to BofA Securities. The headline CPI came in weaker than expected in July, with inflation moderating to 0.5% on year, it notes. That came in the wake of softer gains in gasoline prices, it adds. "Going forward, with the persistent weak domestic demand, and the fading of gold price base effect, we may see continued pressures in core CPI inflation as well as PPI inflation for consumer goods," BofA Securities writes in a research note. (tracy.qu@wsj.com)
0501 GMT - The BOJ is likely to raise rates in September instead of in October, say two economists at Barclays, as they frontload their rate-hike call. The Summary of Opinions from the BOJ's July 30-31 meeting released today "sounded more hawkish overall than Gov. Ueda's remarks and gave an impression that policymakers are positive about deciding on a rate hike at the September meeting," the economists say. Barclays now forecasts three BOJ rate increases: September 2026, January 2027 and July 2027, with a terminal rate of 1.75%, compared with prior projections of two rate hikes in October and April, with a terminal rate of 1.5%.
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