Two labour reports landed on the same morning and split the book down the middle. US nonfarm payrolls unexpectedly declined by 23,000 in July against a Dow Jones consensus of +83,000, with May revised down 66,000 and June down 37,000, leaving the two months a combined 103,000 lower than previously reported — a direct hit to our one dollar leg, long USD/CHF, which gave back its entire week on Friday. Canada went the other way, adding 75,000 jobs against consensus of 15,000 with unemployment falling to 6.4%, its lowest in two years, lifting the loonie against the dollar and validating long CAD/CHF while punishing the tactical GBP/CAD long. Swiss July CPI came in at 0.4% year-on-year, below the 0.5% consensus, with core steady at 0.3% — the cleanest possible confirmation for the six franc longs that anchor the book. And the yen complex was blown up by positioning rather than price: net JPY positioning improved by nearly 118,000 contracts, the largest weekly increase since at least 2011, cutting the net short to just below 45,500 and lifting the yen from the 2nd to the 63rd historical percentile in one week.
How our views are tracking
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Long SGD/CHF — thesis strengthened The Swiss CPI undershoot widens rather than narrows the bilateral inflation gap the trade is built on, and with no MAS event until October the differential works mechanically from here. |
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Long CAD/CHF — thesis strengthened Both legs delivered — the Canadian jobs beat directly undermines the slack narrative funding the record speculative short — though the tactical case is now largely spent and the oil leg is deteriorating underneath it. |
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Long AUD/CHF — thesis unchanged The franc leg was reinforced by the CPI print and the trend is the cleanest in the book, but the position walks into a binary test on Tuesday where all 37 economists in a Reuters poll expect a hold at 4.35% and the language, not the level, decides it. |
Invalidator watch
One invalidator has fired: the yen positioning condition on our CHF/JPY short is breached on both required legs, and because the identical positioning test sits inside the NZD/JPY, GBP/JPY and SGD/JPY theses, this is a cluster event across the whole yen-short block rather than a single-position problem — treat those four as one correlated exposure pending formal review. Two others moved closer without triggering: Brent recorded a more than 7% weekly decline despite rising above $83 on Friday, with prices highly sensitive to a potential Iran-Oman agreement on Hormuz shipping, which puts the CAD/CHF oil condition into live monitoring for the first time, while every franc long remains comfortably clear of its trend invalidator.
Next week
| Mon Aug 10 | BoJ Summary of Opinions | Affects: CHF/JPY, GBP/JPY, NZD/JPY, AUD/JPY |
| Tue Aug 11 | RBA decision + Statement on Monetary Policy | Affects: AUD/CHF, GBP/AUD |
| Wed Aug 12 | US July CPI | Affects: USD/CHF |
| Wed Aug 12 | Singapore Q2 final GDP | Affects: SGD/CHF |
| Thu Aug 13 | UK Q2 GDP and June trade | Affects: GBP/CHF, GBP/AUD |
Wednesday's US CPI is the one that matters, and its asymmetry has inverted since our 1 August work: next week's inflation data will be crucial for markets because it is now the sole remaining input that can rescue a September tightening case after a negative payroll print — a hot number restores the USD/CHF thesis in a session, an in-line one leaves the dollar leg without a catalyst until Jackson Hole. Second in importance is Tuesday's RBA statement, which comes with the Board's comprehensive updated forecasts for inflation, GDP and the labour market and is the direct test of the conditioning-clause invalidators behind both AUD/CHF and short GBP/AUD.
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