Newsletter · · Ashutosh Agarwal

Jobs Miss Softens the Dollar as Oil Caves - the commodity-currencies FX weekly - Week of August 7, 2026

A synthesis of this week's FX and commodity-currency podcasts for the week of August 7, 2026: a US jobs miss softened the dollar and lifted the Australian dollar, Canadian dollar, and Norwegian krone even as oil caved and copper printed record highs.

the commodity-currencies FX weekly

Week of August 7, 2026: Jobs Miss Softens the Dollar as Oil Caves

The commodity currencies got a second week of breathing room, and once again it had almost nothing to do with a mine, an oil field, or a central bank in Oslo or Wellington. It came from a single number out of Washington: on Friday, the US economy was reported to have lost 23,000 jobs in July.

That miss did two things at once. It cooled fears that the Federal Reserve is about to raise interest rates in September, the threat that has hung over this whole bloc for a month, and it took another bite out of the US dollar, which fell 1.6% on the week. When the dollar softens, the currencies in this letter tend to firm, and they did. The Australian dollar's 10-year bond yield popped back over 5%; the loonie strengthened.

But hold the celebration. The relief is built on a wobble, not a turn. Long-term US interest rates are still parked near two-decade highs, a December Fed hike is still better than three-in-four odds, and the make-or-break inflation numbers land next week. Meanwhile the commodity leg of the story went the other way: oil caved, dropping something like 12-14% on the week after President Trump said talks with Iran to reopen the Strait of Hormuz were underway. For the two petro-currencies here (the Canadian dollar and the Norwegian krone) that trims the income that was supposed to be their tailwind.

And for the first time in a while, we actually have things to say about the Aussie and the krone directly: the Reserve Bank of Australia meets Tuesday, Norway's Norges Bank meets this week, and this week's podcasts previewed both.

TL;DR

  • The July jobs report was the pivot. The US lost 23,000 jobs, and wage growth cooled to 3.2% a year. Markets cut the odds of a September Fed hike to about 44% (down roughly 10 points on the day), though a December hike still sits at 77%. The dollar fell 1.6% on the week.
  • RBA on Tuesday: a "hawkish hold." Two separate previews expect the Reserve Bank of Australia to leave its cash rate at 4.35%, likely unanimously, after three hikes earlier this year, while keeping the door open to hiking again. Australian inflation has cooled faster than the RBA expected, but it's still above target.
  • Oil caved. Brent fell about 5% in a day to $83.67 and kept sliding; US crude (WTI) dropped into the mid-$70s, down roughly $12 on the week. OPEC added a token 188,000 barrels a day from September. One credible strategist thinks oil is structurally heading toward its ~$55 production cost.
  • China is still cushioning the oil shock, and that's the warning. China has cut its crude imports by about 4 million barrels a day, running down a strategic stockpile it built when oil was cheap rather than buying at $80+. Good for global inflation, but a flashing sign of soft Chinese demand.
  • Canada's 50% tariff is now aimed at autos too. Effective August 19 under a 1930s law, it targets cars, spirits (US whiskey exports to Canada are down 81%) and dairy, but still spares energy, potash, and critical minerals. That's an escalation from last week, when autos looked carved out.
  • Norges Bank: now expected to hold at 4.25%, a change of view after June inflation surprised lower. And Norway is leaning into more North Sea oil and gas.
  • Copper hit fresh all-time highs near $6.70 a pound, its best-ever monthly close, on storm disruption in Chile and razor-thin inventories. With the Aussie miners silent again, copper is our stand-in for the Australia trade.
  • Quiet corners: the New Zealand dollar, the Swedish krona, the Mexican peso, and iron ore got no real airtime.

What's new

The jobs miss did the heavy lifting. This is the engine of the week, so it's worth slowing down on. On Friday the US was reported to have shed 23,000 jobs in July, an outright decline. The plain-English read came from Steve Liesman of CNBC on Closing Bell (Aug 7): "minus 23,000 on non-farm payrolls," with average hourly wages "down a tenth for a 3.2% year-over-year rate," in other words, no fresh inflation coming from the job market. He flagged the market's reaction: the odds of a September rate hike fell "down to 44%… down about 10 points," while a December hike stayed "strong, 77%." His bigger point: new Fed chair Kevin Warsh will be "less data point dependent and more… trend dependent," so next week's inflation reports "will be… much more important than the jobs report." (This is CNBC news commentary.)

Why a currency letter cares: a Fed that's less likely to hike is a softer dollar, and a softer dollar lifts this whole bloc. The cleanest confirmation came from Australia's own National Australia Bank, an actual bank FX desk, on NAB Morning Call (Aug 2). NAB's Sky Masters and host Phil Dobbie ran the numbers: the US dollar "over the week… did fall 1.6%," the yen jumped, and Australian 10-year bond yields were "back over 5% now on futures." (Operator, a bank markets desk.)

There's a fascinating plumbing detail underneath the dollar's slide. Part of the move was engineered. The US and Japan jointly intervened to prop up the sinking yen, the first time Washington and Tokyo have teamed up to do so in nearly 30 years. NAB reported that "the Bank of New York took the unusual move of conducting a sale of euros to buy yen on behalf of the Treasury," routed through Goldman Sachs and Morgan Stanley. On Forward Guidance (Aug 7), the hosts explained the clever bit: Treasury Secretary Bessent "sold euros rather than dollars" to support the yen, which quietly nudged the dollar index down without the Treasury having to sell any of its own bonds. In short, some of this week's dollar softness was a deliberate side effect of a yen rescue, not a vote of confidence in the US economy.

A softer dollar and a lost 23,000 jobs handed the exporter currencies a second week of oxygen, but it's oxygen borrowed from a Fed credibility wobble, not a genuine turn in the cycle.

The RBA takes center stage Tuesday, expect a "hawkish hold." For once, the Aussie's own central bank is the story, and two previews lined up. On Bloomberg Daybreak Weekend (Aug 7), Bloomberg economist James McIntyre argued the RBA will likely "sound hawkish" at its August meeting even though June inflation came in softer than expected, because inflation is still above target, while hinting the bank may soften its tone toward year-end as Australia's housing downturn and weak consumer demand bite. Australia's inflation, he noted, has cooled faster than the RBA assumed when it delivered three rate hikes earlier this year. (Operator, a bank economist.)

Nomura's Andrew Teisort put a finer point on it on Nomura, The Week Ahead (Aug 7): the RBA will "announce an unchanged cash rate of 4.35% in what will likely be another unanimous vote," because "unemployment and underemployment are higher, inflation is lower, and the housing market is weaker than it expected." But with "annual inflation… well above target… for some years now" and "spare capacity still limited," he expects the board to "reiterate a preparedness to hike again if necessary." One detail worth flagging for the currency: Nomura thinks the RBA's fresh forecasts will bake in "a modestly weaker currency and a lower market path for the cash rate." (Operator, sell-side research.) Translation: the Aussie is done with rate hikes for now, but its central bank isn't going soft, a mildly supportive backdrop that, layered on the weaker dollar, is why the Aussie firmed.

Oil went from a slow bleed to a genuine cave-in. This is the second-biggest driver for the bloc, because Canada and Norway earn more when crude is high. Oil started the week around $88 Brent and $85 WTI (per NAB), then broke lower after President Trump said fresh Iran talks were on. On Bloomberg Daybreak (Aug 3), Mike McGlone, senior commodity strategist at Bloomberg Intelligence, caught the drop live: "Brent this morning is down almost 5%… at $83.67 a barrel," with WTI "about $79." He was blunt about direction: "lower highs and lower lows," a high "put in… this year," and, over time, oil heading toward the US cost of production, "around $55 a barrel." His framing of why is the interesting part, "Mr. Trump needs lower energy prices by midterms," and his structural call is a big one for Canada: by end-2028 the US-plus-Canada surplus of crude and liquid fuels could "approach 10 million barrels a day," roughly what China was importing before the conflict, making the Western Hemisphere the world's oil "price maker." (Operator/expert, a bank strategist.)

By week's end the cave-in was plain. Multiple charting podcasts had WTI in the mid-$70s, down about $12 (roughly 14%) on the week, with technicians eyeing support down at $73, $71, even $68, and muttering that "the upper 60s could become the new normal" (The Nasdaq Dorsey Wright Podcast, Aug 6). OPEC, meeting Sunday, added a token 188,000 barrels a day from September, reversing its 2023 cuts, which, as NAB dryly noted, is "not really going to make much difference if you can't get it out through the Gulf."

Why oil keeps disappointing the bulls: China, again. Here's the puzzle a real energy investor tackled head-on. Brian Kessens, Senior Portfolio Manager at Tortoise Capital, on Tortoise Capital QuickTake (Aug 5): six months into a conflict that has all but shut the Strait, "we would have said you're well into the $100 per barrel." Instead we're in the 80s (now lower). His reconciliation: about 7 million barrels a day are bypassing the Strait via a Saudi east-west pipeline; inventory draws are running ~4.5 million a day; but "the biggest surprise… has been China's reaction. China has reduced their crude oil imports by about 4 million barrels per day." Why? Because China spent years quietly stockpiling, "maybe that reserve is up towards a billion barrels," when oil was $50-60, and now, at $80+, it simply isn't buying. (Operator, an energy fund manager.)

That is the same theme this letter flagged last week, and it still cuts both ways. It's why the great oil shock never really arrived (good for global inflation), and it's a quiet warning about the strength of Chinese demand, the demand that ultimately buys Australia's iron ore and Canada's crude. Nomura's team reinforced the soft-demand read, expecting China's July inflation to slip to just 0.8% a year on "weak domestic demand."

Canada's tariff got bigger teeth, now aimed at cars. For the loonie, the tariff saga escalated. The clearest walk-through came from the CSIS trade experts Scott Miller and Bill Reichsgauer on The Trade Guys (Aug 3). The mechanics: a 50% tariff on certain Canadian goods, effective August 19, under Section 338 of the 1930 Tariff Act, a century-old, almost-never-used law that punishes discrimination rather than declaring an emergency. Miller named the three target categories: "first, autos, actually autos and auto parts. The second is spirits… And the third is dairy." On spirits, the damage is real and mutual, US whiskey and spirits exports to Canada "are down 81% since the action was taken," thanks to provincial liquor-board bans and a consumer boycott. (Expert/insider.)

Two things matter for the currency. First, the crucial carve-outs hold: the tariff "excluded" energy, potash (the fertilizer ingredient), critical minerals, and civil aircraft, so the goods that actually earn Canada its foreign income are spared, and the whole thing is only about "5% of total US exports to Canada." Second, and this is the escalation, autos are now in. Last week the read was that vehicles were carved out; this week they're category number one, and a separate trade strategist on unPACKed with PMMI (Aug 5) described the "USMCA carve-out removed."

Reichsgauer added the politics, which are the real obstacle to a deal: the discrimination Trump is citing "are exactly the Canadian retaliation for US tariffs… he is complaining about a problem that he created." And Prime Minister Mark Carney, with a one-or-two-seat majority and a country where "it's good politics… to attack the United States," has little room to fold, "the harder Trump pushes Canada, the harder it is for Carney to make concessions." He also dropped the stat that frames the loonie's whole macro backdrop: Canada is "the only G7 economy which is in recession, technically."

And the loonie's rate story is a genuine two-way fight. Away from tariffs, The Loonie Hour (Aug 7), a dedicated Canadian macro podcast, laid out a real debate. The bond market is pricing Bank of Canada hikes: "50% chance between now and December" and about "86%… by next March." The hosts think that's wrong. Their macro analyst, Rich, changed his own mind on the record: "I think Canada's core inflation is going to be under a lot of pressure coming down," because the underlying economy is weak, "much lower population growth" (negative three quarters running), "really shitty productivity growth, and zero investment growth." Headline inflation may rise on food and fuel, but core, where shelter is roughly 30% of the basket, and "shelter ain't going up any time soon," should soften. The supporting evidence: youth unemployment at 12.8%, falling real wages, Toronto listings down 17.8% year-on-year with sales near multi-decade lows, and Carney announcing C$2.7 billion for about 5,600 new rental homes. (Informed commentary from a dedicated macro podcast, not a bank desk.) If Rich is right and the market's BoC-hike pricing unwinds, that's a mild headwind for the loonie underneath the softer-dollar tailwind.

Norway, unusually, got a real preview, and it points to a hold. The krone almost never gets airtime, so two mentions this week is a bonanza. On the rates side, Nomura's Andre Stjepaniek used the same Week Ahead episode (Aug 7) to flag Norges Bank's meeting and a change of view: "we now think that the Norges Bank will leave rates unchanged at 4.25%. We had previously thought they would raise rates." The June projections had implied roughly a 50% chance of an August hike and some board members wanted to move then, but June inflation "surprised to the downside," so Nomura pushed its call back. He warned it's "a tight one to watch," since Norges Bank "surprised analysts and markets" with a hike only a few months ago. (Operator, sell-side research.)

On the structural side, Super-Spiked (Aug 1), by former Goldman energy analyst Arjun Murti, argued Norway is "remembering that increasing oil and natural gas supply from the Norwegian North Sea is critically important to geopolitical security and economic health for Norway, Europe, and its allies," even floating a "US + Canada + Norway" alliance of "energy and technology superpowers." (Operator/expert commentary.) It's a slow, supportive backdrop for the krone's terms of trade, though this week's oil cave-in pulls the other way.

Copper printed fresh records, our proxy for the Aussie trade. With not a word on iron ore or the big Australian miners (BHP, Rio Tinto, Fortescue) this week, copper is again the cleanest read on the industrial cycle Australia rides, and copper is on fire. Newsletter publisher and resource investor Nick Hodge on The KE Report (Aug 7): copper is at all-time highs, "up over 670 a pound," and "July was the highest monthly close copper has ever put in." He put his money on it, buying Ero Copper (up 15% in six days), though he flagged the live risk of a US import tariff (a Section 232 investigation that has passed its deadline with no decision). (Informed commentator, not a company operator.)

The supply story came from an actual operator, Ian Harris, president and CEO of Copper Giant, on The David Lin Report (Aug 5). He watched copper spike intraday "from $6.26 to $6.34" on news of "deadly storms in Chile," the world's top producer, where output is "down 15%." His structural point: worldwide inventories are near a historical low of "like 15 days," and supply simply can't respond, "it takes you six months to make a wire plant… 20 years to make a mine." (Operator.) The read-through for Australia is constructive on the resource cycle, we just have to infer it, because the Aussie's mining complex went undiscussed.

The debate

This week's argument isn't about any one currency, it's whether the bloc's second week of relief is the start of something or another head-fake. And the podcasts genuinely support both sides.

The bull case (a soft dollar lifts the whole bloc). This is the case that actually played out. The July jobs miss cooled the September-hike threat, the dollar fell 1.6%, and the exporter currencies firmed, the exact channel this letter watches for (NAB Morning Call, Aug 2). Layer on a resource backdrop that's still firm, copper at record highs on genuine supply stress (The David Lin Report, Aug 5), and an RBA that's holding steady but keeping a hawkish bias (Nomura, Aug 7), and you have a real, if modest, tailwind for the Aussie in particular.

The bear case (it's fragile, and the commodity leg is weakening). Two problems. First, the dollar's softness is a credibility story, not a clean easing: long-term US yields are still near two-decade highs, the December hike still sits at 77% (Closing Bell, Aug 7), and part of this week's dollar dip was an artifact of the US-Japan yen rescue (Forward Guidance, Aug 7). Next week's inflation prints could reignite the hike trade in a heartbeat.

Second, the commodity leg turned against the petro-currencies. Oil caved 12-14% (Bloomberg Daybreak, Aug 3), trimming Canada's and Norway's terms of trade, and a credible strategist sees it structurally lower toward $55. Worse, the reason oil is soft, China buying ~4 million fewer barrels a day (Tortoise Capital, Aug 5), is itself a red flag about the Chinese demand that underpins the entire commodity bloc. As last week, no one this week made a confident, clean case for a China reflation lifting the complex. That argument still isn't being voiced.

The honest picture: the soft-dollar bull case won again on points, and the exporter currencies got their bounce. But it's a bounce leaning on a Fed wobble and a yen rescue, while the oil that's supposed to power Canada and Norway just fell out of bed. Next week's US inflation data is the referee.

Trades in play

The FX desks stayed conceptual again this week, NAB gave observations, not recommendations, and no strategist put a clean directional call on the Aussie, loonie, or krone. So we won't manufacture one.

Where conviction did show up, a layer removed from the currencies, was copper, the best available proxy for an Australia view. Nick Hodge is outright long the space (Ero Copper), and Ian Harris laid out the structural case: record-low inventories, a supply base that can't respond for years, and demand from electrification and AI. It's a resource-cycle bet, with the honest caveats that a US copper tariff is a live downside risk and that these are resource-sector voices, not currency strategists.

The one FX-adjacent view worth noting is on Canadian rates: The Loonie Hour is effectively fading the market's Bank of Canada hike pricing (50% by December), arguing core inflation is set to fall in a weak economy. If they're right, it's a mild headwind for the loonie, but it's a rates opinion from a macro podcast, not a packaged trade, so treat it as a thread to watch, not a signal to act on.

Read-throughs

  • WTI / Brent + Canadian energy (CNQ, SU, ENB): the clear negative of the week. Oil caved, Brent to the low $80s, WTI into the mid-$70s (down ~$12) on Iran peace-talk hopes (Bloomberg Daybreak / McGlone, Aug 3; Tortoise Capital, Aug 5), trimming the petro-currency tailwind for the loonie. The offset: Canadian energy is explicitly carved out of the new tariffs (The Trade Guys, Aug 3). No one named Suncor or Enbridge on the numbers this week.
  • Copper: the bright spot. Fresh all-time highs near $6.70/lb, best-ever monthly close, on Chile storm disruption and ~15-day inventories (The KE Report / Hodge, Aug 7; The David Lin Report / Harris, Aug 5). Watch a possible US copper tariff as the downside. Constructive for the resource cycle Australia rides.
  • The yuan / China cue: no direct FX or PBoC call, but the dominant China signal is China's ~4-million-barrel-a-day cut to oil imports, drawing on a stockpile it built cheaply rather than buying at $80+ (Tortoise Capital, Aug 5). Read alongside Nomura's call for China's July inflation to slip to 0.8% on weak domestic demand (Nomura, Aug 7), the message is a soft, not a reflating, China.
  • Equinor / Norway / NOK: two-sided. Norges Bank is now expected to hold at 4.25% after June inflation surprised lower (Nomura, Aug 7), and Norway is leaning into more North Sea output for energy security (Super-Spiked, Aug 1), a structural krone positive, but this week's oil cave-in is a near-term negative for its terms of trade.
  • MXN / Banxico: nothing direct, but the tariff experts drew a sharp contrast, Mexico's government and business community want to accommodate Trump, while Canada politically can't (The Trade Guys, Aug 3), implying Mexico may fare better than Canada in this tariff round.
  • Iron ore + BHP / Rio / Fortescue, the kiwi, and the Swedish krona went unmentioned this week; copper is standing in for the Australia read, and there was no fresh RBNZ, dairy, Riksbank, or Swedish-bank material to work with.

What changed

Three genuine shifts from last week, and they're linked.

The Fed narrative flipped, twice. A week ago the story was a "hawkish hold" and a September hike as many people's base case (~54%). Early this week a Financial Times report that Warsh would hike if inflation ran hot pushed those odds up. Then Friday's jobs miss knocked them back down to about 44%, while December held at 77% (Closing Bell, Aug 7). Net: the September threat receded, the dollar softened, and the bloc got relief, but the fight just moved to next week's inflation data.

Oil reversed hard. Last week Brent was sliding in the high $80s on ceasefire hopes; this week it broke, with WTI falling under $80 into the mid-$70s after Trump announced fresh Iran talks. The petro-currency tailwind for Canada and Norway weakened materially just as the dollar tailwind strengthened, pulling the loonie and krone in two directions.

The Aussie and the krone re-entered the conversation. Last week there was "no serious discussion of the Australian dollar's fundamentals" and Norway got only a sovereign-wealth-fund explainer. This week both central banks got proper previews, RBA holding at 4.35%, Norges Bank now expected to hold at 4.25%, and the Canada tariff escalated to include autos, having appeared to spare them a week ago. Meanwhile a brand-new cross-asset event landed: the first joint US-Japan yen intervention in about 30 years.

What didn't change: the US dollar is still the boss of this bloc; China is still the swing factor for everything from oil to copper (and still looks soft, not reflating); and the New Zealand dollar, the Swedish krona, and the Mexican peso still aren't getting real airtime.