Key Takeaways
- Canadian employment insurance claims rose 2.2% in July, marking the third consecutive monthly increase and signaling a weakening labor market, with youth unemployment reaching 14.6%.
- The USD/JPY exchange rate surged 0.5% to 147.73, driven by recent U.S. tariff extensions, the dollar's safe-haven appeal, and the Bank of Japan's cautious monetary stance.
- Housing starts weakened in both Canada and the US in August, with Canadian starts dropping 16% and US builder sentiment remaining negative due to high mortgage rates and construction costs.
- House Democratic leaders have urged FCC Chair Brendan Carr to resign following his pressure on Disney (DIS) to cancel the Jimmy Kimmel show, raising significant concerns about free speech and potential regulatory overreach.
- Ukraine launched counterattacks near Dobropillia and Pokrovsk, with President Volodymyr Zelensky reporting success in preventing Russian advances and calling for enhanced European air defense systems.
Economic Indicators Signal Headwinds
Recent economic data points to a mixed but generally weakening global outlook. In Canada, the number of individuals receiving regular Employment Insurance (EI) benefits increased by 2.2% (+11,000) in July, reaching a total of 489,000 beneficiaries. This marks the third consecutive monthly rise and a 10.0% year-over-year increase. The national unemployment rate climbed by 0.3 percentage points to 6.4% in the three months leading up to July, as more Canadians sought work amidst steady overall employment. Particularly concerning is the youth unemployment rate for those aged 15-24, which surged to 14.6% in July, the highest level since September 2010 outside of pandemic years.
The housing market in both Canada and the United States showed signs of softening in August. Canadian housing starts dropped by 16% to 245,800 units, with the year-over-year trend slipping back into negative territory. This decline was largely attributed to a nearly 47,000-unit fall in urban multi-family projects compared to July. Despite the monthly dip, the six-month moving average for new home construction in Canada still climbed 1.6% to 267,300 units, supported by robust rental demand and government incentives. In the United States, housing starts fell 3% in August to a seasonally adjusted annual rate of 1.13 million homes. Builder sentiment also declined, with the NAHB/Wells Fargo Housing Market index dropping from 33 to 32, remaining in negative territory due to persistent high mortgage rates, rising construction costs, and regulatory hurdles. New listings in the US market saw a 7.3% decrease from July, marking a record low for August as sellers opted to hold onto properties, likely influenced by favorable mortgage rates and strong equity gains.
Currency Markets and Geopolitical Tensions
The USD/JPY exchange rate experienced a notable rise, climbing 0.5% to 147.73. This upward movement is primarily driven by the U.S. dollar's role as a safe-haven asset amidst escalating geopolitical tensions, particularly following recent U.S. tariff extensions that have introduced uncertainty into the Japanese economy. The Bank of Japan (BoJ) has maintained a cautious monetary policy, keeping its benchmark interest rate at 0.5%. This data-driven approach by the BoJ has tempered expectations for further rate hikes in 2025, thereby limiting gains for the Japanese Yen. Meanwhile, the Federal Reserve is reportedly in a "wait-and-see" mode, with market participants anticipating a potential interest rate cut in September.
Political and Regulatory Developments
In a significant development concerning media and regulation, House Democratic leaders have called for the resignation of FCC Chair Brendan Carr. This demand follows Carr's public pressure on Walt Disney (DIS) to cancel the "Jimmy Kimmel Live" show after remarks made by the host regarding the assassination of conservative activist Charlie Kirk. Carr explicitly warned that the FCC could investigate, fine, or revoke licenses if a "pattern of distorted commentary" emerged, stating, "This is a very serious issue for Disney. We can do this the easy way or the hard way". Nexstar Media Group, which is currently seeking FCC approval for a $6.2 billion merger with Tegna, subsequently announced it would no longer air the show, a move praised by Carr. Democratic lawmakers have widely condemned these actions, characterizing them as an attack on free expression and governmental overreach. Carr, appointed FCC Chair by Donald Trump in January 2025, has a history of threatening media companies that host content critical of Trump and conservatives.
Separately, Eric Trump has publicly downplayed the family’s cryptocurrency gains, defending the $MELANIA and $TRUMP memecoins as "fun" in a recent Financial Times interview. These memecoins, launched by Donald Trump shortly before his inauguration and later for Melania Trump, have been described as a "pump-and-dump operation" with a significant portion of the supply reserved for insiders. The value of the $TRUMP memecoin notably surged after Trump offered private dinners and "Special VIP Tours" to top investors.
Ukraine Intensifies Counteroffensive Efforts
On the geopolitical front, Ukrainian President Volodymyr Zelensky announced that Ukraine's military is actively conducting counterattacks near Dobropillia and Pokrovsk in the eastern part of the country. These military actions are aimed at thwarting Russian plans and preventing further advances. Ukrainian forces have reportedly succeeded in cutting off Russian units that had breached a defensive line north of Pokrovsk and have cleared Russian invaders from three villages in Donetsk Oblast: Mykhailivka, Zelenyi Hai, and Volodymyrivka. Zelensky acknowledged the challenging situation on the Pokrovsk front, where Russia has concentrated its main efforts, but emphasized the critical importance of holding the line. These counterattacks have also resulted in the capture of dozens of Russian prisoners. Furthermore, Zelensky has called for a "joint protection of our European skies" through a multi-layered air defense system, revealing that Russia has launched over 3,500 drones, 190 missiles, and 2,500 aerial bombs against Ukraine since the beginning of September.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.