ISM Non-Manufacturing PMI:<\/strong> Previously at 51.4, and no change is expected this month. It’s a bit like treading water\u2014you\u2019re not sinking, but you\u2019re not exactly swimming to shore with vigour either. The steady figure above 50 suggests that while services are holding their own, the growth is more tortoise than hare. GDP, it seems, is inching forward, but don’t expect it to break any land speed records.<\/p>\n\n\n\n To better understand the divergence between these sectors, the chart above compares the ISM Manufacturing PMI with the ISM Non-Manufacturing PMI over the past year. Notice how the services sector remains just above the growth threshold, while manufacturing is still struggling to regain its momentum.<\/p>\n\n\n\n The job market has been the centre of attention lately, and for good reason. Last month\u2019s NFP was a decent 114k, but this month the consensus is a more robust 163k. It\u2019s as if the job market is giving a little wave to say, \u201cHey, I\u2019m still here!\u201d No alarms are ringing yet, and while it\u2019s not a parade, there\u2019s certainly a sense of stability in the air.<\/p>\n\n\n\n To put this into perspective, the chart above juxtaposes the Non-Farm Payrolls data with the US unemployment rate, illustrating how job creation has correlated with unemployment trends in recent months. This visual reinforces the idea that, despite some fluctuations, the job market remains resilient.<\/em><\/p>\n\n\n\n The Bank of Canada (BoC) is all set to make headlines again, and not for their poutine recipes. The central bank is widely expected to cut the overnight rate for the third consecutive meeting, with the goal of bringing it down to a more neutral level quickly. The expectation is for rates to drop to 3% by Q2 2025, like a cautious driver easing off the gas as they approach a bend in the road.<\/p>\n\n\n\n The BoC started this easing cycle on June 5th, buoyed by data that inspired confidence in inflation trending towards the 2% target. A follow-up cut on July 24th was backed by further evidence of \u201cbroad price pressures continuing to ease,\u201d with excess supply keeping inflation at bay.<\/p>\n\n\n\n Since then, things have only cooled more. Business surveys show further softening, employment has dipped for the second month in a row, and headline inflation has relaxed to 2.5%, sitting comfortably within the BoC\u2019s target range. It\u2019s like the Canadian economy is bundling up for winter, preparing for a period of slower growth and reduced inflation.<\/p>\n\n\n\n Given these conditions, we foresee further rate cuts. We\u2019re in agreement with the market\u2019s pricing of another 25 basis point cut on September 4th, with the overnight rate likely to settle around 3% by mid-2025. For the Canadian dollar (CAD), this isn\u2019t particularly great news. With the BoC likely to cut rates three more times this year, CAD might struggle to outshine other pro-cyclical currencies like the AUD and NZD. Even as the USD shows a softer month, the CAD is unlikely to steal the spotlight.<\/p>\n\n\n\n![\"\"](\"https:\/\/alchemymarkets.com\/wp-content\/uploads\/2024\/08\/ism-1024x729.png\")
<\/figure>\n\n\n\nUSA: Non-Farm Payrolls (NFP) – Job Market Jitters<\/h3>\n\n\n\n
![\"\"](\"https:\/\/alchemymarkets.com\/wp-content\/uploads\/2024\/08\/Unemployment-Rate-1024x634.jpg\")
<\/figure>\n\n\n\nCanada: BoC Interest Rate Decision – A Slice of Maple-Flavoured Caution<\/h3>\n\n\n\n
![\"\"](\"https:\/\/alchemymarkets.com\/wp-content\/uploads\/2024\/08\/image-53-1024x695.png\")
<\/figure>\n\n\n\n
![\"\"](\"https:\/\/alchemymarkets.com\/wp-content\/uploads\/2024\/08\/image-54-1024x695.png\")
<\/figure>\n\n\n\n