China reveals extended weak FDI; Canada gets tariff inflation; Japan inflation dips but rice still a problem; US markets like that Powell de-emphasising the inflation fight; UST 10yr at 4.26%; gold and oil firmer; AU$1 = 64.9 USc;

​Here's our summary of key economic events over the weekend that affect Australia, with news Fed boss Powell gave a hint at Jackson Hole that weaker American labour market conditions may trump inflation risks when they next meet in three weeks - and a rate cut is a live possibility.

Before that, all eyes will be on our July's monthly CPI data to be released on Wednesday.

China will be releasing its August PMIs this week. India will updated its Q2-GDP, and its July industrial production data. And Canada will also have a Q2-GDP update too.

But we shouldn't forget that the northern hemisphere has been getting in the last of its summer vacations recently. This is the final week before the US Labor Day national holiday on September 1, 2025, the traditional end of their summer holiday period and when their financial markets build back up to full strength.

They will be coming back after digesting the Fed's latest indicators from Powell's Jackson Hole speech. He noted the core US economy has weathered the "sweeping changes in [US] economic policy" well, but now says "the balance of risks appears to be shifting" - to the negative side. Markets have taken this as a hint a rate cut could come as early as their mid September meeting.

The US equity markets roared back to post a record high in Friday. The USD fell. Benchmark bond yields retreated.

However, in the euphoria of the possibility of a rate cut markets seem to be ignoring this part: "inflation expectations could move up, dragging actual inflation with them. Inflation has been above our target for more than four years and remains a prominent concern for households and businesses". But they are betting on the 'transitory' inflation story again. Inflation embedded for four years, and juiced by tariffs, will be ignored at their peril.

Across the border, Canadian retail sales in June were +6.5% higher than a year ago, the best rise since the pandemic recovery period in 2022. But some of this is just higher prices flowing through from their tariff dispute with the US, and a small correction dip is expected in the July data. And the Canadians are not ignoring the inflation risks of tariffs. To keep a lid on these inflationary effects of that dispute, Canada said it will roll back some of its retaliatory tariffs on the US. The US isn't doing the same, so their consumers will still pay the extra on imports.

Across the Pacific, China reported more ugly foreign direct investment data over the weekend. While it didn't actually shrink like it did in April and June, it is running -13.4% below year ago levels, and it is still less than half the July ytd levels of 2022 or 2023, and down -7.3% from last year. The June to July gain this year, while welcome, isn't anything more than a statistical blip in the context of the fall away over the last four years.

So it is no surprise that Beijing is reorienting to a focus on internal consumption - something they have a chance of still controlling. The international trade environment isn't moving in their favour and even where they do still get gains, they are not enough to move their needle.

There was a surprising dip in Japanese inflation in July. It eased to 3.1% from 3.3% in the previous month, the lowest reading since November 2024. Helping was that electricity prices fell for the first time since April 2024. But food prices jumped +7.6%, the most since February. Again, rice was the big culprit.

New data out from the ABS shows our R&D investment grew by +18% to AU$24 bln in 2023-24. The strongest growth was in IT including spending on Artificial Intelligence, which grew by +142% since 2021-2022.

The UST 10yr yield is now at 4.26%, essentially unchanged from Saturday at this time, down -6 bps for the week. The key 2-10 yield curve is now still at +57 bps. Their 1-5 curve is still inverted and still by -13 bps. And their 3 mth-10yr curve is inverted -9 bps. The Australian 10 year bond yield starts today at 4.32% and up +1 bp from Saturday, up +5 bps for the week. The China 10 year bond rate is up +1 bp at 1.79%, also up +5 bps for the week. 

Wall Street roared back in Friday trade with the S&P500 up +1.5% after the Powell hint of a rate cut next month. That means it is able to claim a +0.4% advance for the week which pushed it to a new record high.

The price of gold will start today at US$3,370/oz, down -US$1 from Saturday, up +US$36 for the week.

American oil prices have held at just under US$64/bbl with the international Brent price now just under US$68/bbl. These levels are more than +US$1 higher than a week ago.

The Australian dollar is at just on 64.9 USc and unchanged from Saturday at this time. Against the Japanese yen we are marginally firmer at ¥95.4. Against the euro we are unchanged at 55.4 euro cents.

The bitcoin price starts today at US$114,366 and down -2.2% from this time Saturday. Volatility over the past 24 hours has been very low at just under +/- 0.6%.

And finally, AML regulator Austrac has directed Binance to appoint an external auditor after identifying serious concerns with the crypto exchange’s anti-money laundering and counter terrorism financing controls.