By Michael O’Neill

It started with a disappointing jobs report. It ended with a political scalp.

Last Friday’s nonfarm payrolls miss—just 73,000 jobs added in July—might have been waved off by markets as a summer lull if not for the brutal kicker: 258,000 jobs quietly erased from May and June. That revision, in a less dramatic environment, would be viewed as a routine statistical adjustment.

But this isn’t a routine environment. And Donald Trump isn’t a routine politician.

Enraged by what he called “rigged data,” Trump publicly fired the head of the Bureau of Labor Statistics (BLS), Erika McEntarfer that same day, accusing the agency of deliberately undermining him and tanking the stock market. “Those big adjustments were made to cover up, and level out, the FAKE political numbers that were CONCOCTED in order to make a great Republican Success look less stellar!!!”

Apparently, the BLS only became a problem once the numbers stopped working in his favor. On April 4, 2025, after the BLS reported a 228,000-job gain in March, Trump had a very different take:

“GREAT JOB NUMBERS, FAR BETTER THAN EXPECTED. IT’S ALREADY WORKING. HANG TOUGH, WE CAN’T LOSE!!!”

Math was patriotic—until it wasn’t.

Make the Fed Great Again

Trump’s tantrum over the BLS figures has raised questions about the independence of U.S. economic institutions. His unhappiness with Fed Chair Jerome Powell is well known, and his insults and derogatory comments about the man have gotten meaner. When the Fed left rates unchanged on July 30, Trump tweeted: “Jerome ‘Too Late’ Powell, a stubborn MORON, must substantially lower interest rates, NOW. IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!”

On August 1, Fed Governor Adriana Kugler, a Biden appointee, resigned, effective August 8. No specific reason was given. “Let the games begin.” The next day, during an interview on CNBC, Trump talked of replacing the Fed Chair with Kevin Hassett, the Director of the National Economic Council, or Kevin Warsh, a former Fed Governor. And now, with a seat open on the board Trump’s comments are more ominous. Either one of these gentlemen could undermine Powell’s authority and turn him into a lame duck until his term ends in May 2026.

Rate cut odds for September surged after the data, but the broader concern now isn’t just about timing—it’s about credibility. If investors begin to believe monetary policy is being dictated by politics rather than data, risk premiums rise, which could see a sharp spike in bond yields, equity market turmoil, and broad US dollar weakness.

Make Tariffs Great Again

This morning, Trump doubled the existing 25% tariff on India because they were buying sanctioned Russian crude. Switzerland was hit with a surprise 39% tariff yesterday, but larger trade partners—China and Mexico—have been granted extra time for negotiations.

Not Canada—it faces a new 35% tariff on non-USMCA compliant exports August 7.

Big deal! It is old news, and if Canadian and US officials are talking, they are not saying anything of substance to the media.

Making FX Great Again

Currency traders are cheering, “Hurray, hurray for MFXGA.” The chaotic rollout of the tariffs has created many profitable trading opportunities, clearly reflected in strong bank earnings reports.

But the real driver of FX moves is the outlook for Fed interest rates. Traders expect two rate cuts by October and give a 48% chance for another cut in December, which would bring the benchmark rate to 3.75%. If Trump manages to stuff the Fed board with compliant doves, additional easing will be in the cards. And that is good news for the Loonie.

USDCAD direction is more closely attuned to the FOMC monetary policy outlook than that of the Bank of Canada. The BoC fears a resurgence of inflation due to the risk of tariffs resulting in higher prices for Canadians. That’s why they left rates unchanged. Was it a mistake? Many Canadian bank economists believe it was the right decision, justified by the BoC’s CPI-trim (3.0%) and CPI-median (3.1%).

Making StatsCan Great Again.

However, based on Statistics Canada’s measure, the BoC should have eased. Historically, the Stats Canada measure used to be the benchmark, but that changed in 2016 when officials could not explain why CPI was below the target. They decided that different calculations would give them a better read, although whether it is true or not is debatable.

Based on the July 15 reading, CPI was only 1.9%. The Canadian economy is barely treading water, the employment market is weak, and a pre-emptive cut would help cushion the impact of US tariffs on consumers.

The BoC’s inertia led to a narrowing of CAD/US interest rate differentials, which contributed to the USDCAD selling pressure. However, ongoing tariff drama should leave USDCAD in a 1.3600–1.4000 trading range for August.

Trump may be trying to Make Jobs Great Again, but from where his trading partners sit, he’s just making misery great again.