North American FX Open - Fed speak adds to feeling of calm

The main FX pairings are little changed from where we left them last night, but Usd/Jpy has been its usual volatile self, albeit less than normal this week, with trips to 147.82 and 146.72.

Overnight Fed commentary was provided by Goolsbee, Schmid and Collins.

Goolsbee insisted that Fed watches markets, but they don't drive policy, before admitting that he would be a little uncomfortable moving rates so close to the Presidential election. Schmid stated that the inflation target is close, but that the Fed is "not quite there" and that growth and demand in the US economy is still strong despite the July jobs report. Schmid added that the labor market still appears broadly healthy. Finally Collins spoke just before the NA open and argued that it is appropriate to begin easing soon if data develops as expected. She added that the timing and pace of cuts will be based on the data.

So no real panic in the Fed speakers tone and certainly not one which offers hope for those expecting a 50bps cut in September.

Overnight, Chinese CPI for July came in slightly higher than expected at 0.5% y/y vs the 0.3% median and 0.2% in June, a four-month high, driven by gains in food prices.

US equity market futures are slightly higher, reassured by yesterday's fall in jobless claims.

The main labor market focus today switches to Canada, with their July update scheduled.

A 25k rise in employment is the consensus forecast, with the unemployment rate expected to tick up to 6.5%. Focus on the hourly wage rate figure is likely to dwindle now the markets have switched their attention to the growth outlook, instead of inflation developments.

Remember Wednesday's Summary of Deliberations from the Bank of Canada's July meeting showed that the board is focused on the risks a cooling labor market could present to consumer spending.

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