* Trump, Zelensky play nice with eye toward meeting with Putin

* Fed Chair Powell may seriously disappoint Wall Street at Jackson Hole

* Dollar supported by higher Treasury yields amid Ukraine talks

* Us stocks end muted ahead of Jackson Hole, retailers’ earnings

FX: USD found a bid to kick off the week, amid the choppy price action over the last few days. Focus on the week of two halves saw geopolitics assume centre stage with President Trump meeting Ukrainian President Zelensky. Hopes are that a trilateral meeting, with Russian President Putin also, will take place soon. Trump said a solution is possible, though he also might not it done. Sequencing appears to remain key, with Ukraine wanting security guarantees but Russia wanting a land exchange.

EUR moved down back near to its 50-day SMA, now at 1.1640. momentum is decidedly lacklustre currently. The highlight for euro watchers will be the preliminary PMIs released on Thursday. ECB President Lagarde is also scheduled to speak on Wednesday in Geneva, and Saturday at the Fed’s Jackson Hole symposium. ECB officials have been broadly neutral recently.

GBP saw some of the larger losses across its peers versus the dollar. We have more Uk data this week with CPI on Wednesday, PMIs the following day and retail sales to finish off the week on Friday. The outlook for relative central bank policy remains supportive and the UK-US 2-year spread is threatening fresh highs as markets fade their expectations for BoE easing.

JPY lost ground versus the dollar and lagged among its peers. There wasn’t too much specific news flow with eyes on Washington and the Trump-Zelensky encore. Domestic focus will be on the preliminary PMIs and CPI data scheduled for release later this week. Markets also expect to hear from BoJ Governor Ueda at the upcoming Jackson Hole symposium but note the absence of a publicly scheduled appearance.

AUD lacked a clear catalyst and continues to trade around the 50-day SMA.

US stocks: The S&P 500 printed down 0.02% at 6,449. The Nasdaq settled up, by 0.01% at 23,713. The Dow Jones finished off at 44,910 losing 0.08%. Sectors performance was mixed. Five sectors were positive so six were in the red with Real Estate and Communication Services the main laggards. Reports that the Trump administration is looking at taking a 10% stake in Intel saw the stock lose 3.7%. Tesla closed 1.3% higher as media reports said it almost halves the monthly payments as UK sales slump. Walmart, Home Depot, and Target among others all reports this week and are likely to show how trade uncertainty and inflation expectations have impacted US consumers.

Asian stocks: Futures are mixed. Asian markets began the week mostly higher with some hoped-for progress in the Alaska summit. The ASX200 was little changed but made new highs, with earnings releases in the spotlight. Japan rose with the N225 resuming its record-breaking rally. Hong Kong’s Hang Seng fell 1% on weak Chinese data. NetEase dropped 3.5% after poor earnings. Beijing announced steps to boost consumer demand and help the property market.

Gold gave back intraday gains as prices closed below the 50-day SMA at $3,347. Bugs await the next trigger, potentially a US rate cut or renewed focus on rising US debt supporting demand for tangible and alternative assets.

Day Ahead – Canada Inflation

Headline CPI is expected to print at 0.3% in July, a touch below last year’s increase. That trims the annual rate to 1.7%. Shelter, which has long been the key focus for economists, should remain tame for a sixth consecutive month. Energy prices were mixed while there could be upward seasonal pressure. Core inflation is set to print at 0.2%, which keeps the annual rate steady around 3%. Data is still inconsistent to get inflation back to the 2% target. The BoC will need to see a series of reports over months, of falling inflation for more rate cuts.

Chart of the Day – AUD/CAD sat on 200-day SMA

This popular cross has traded sideways between roughly 0.88 and 0.9017 over the past few weeks. Those levels are also two major Fib levels of the September 2024 to April 2025 high low move. Trend momentum remains weak and choppy which suggests the sideways movement in the cross may extend a little more in the short run. But the Aussie’s solid rebound from major oversold levels below 0.85 in April does lend itself to the idea that the recovery can extend in the medium term. A push above 0.9050 resistance may see a new, higher range develop above 0.9150 to above 0.94. Initial support is the 200-day SMA at 0.8955, with the 50-day just below here at 0.8928.