The early US session saw the Bank of England keep rates unchanged by a vote of 5 – 4. That was congruent with the 50-50 chance of a hike. The GBPUSD fell on the news reaching a low of 1.2227 before starting a rebound to the upside that saw the pair move to a post-low high of 1.2307. There is resistance up to 1.2314 which is the broken 61.8% retracement of the 2023 trading range. So far traders are leaning against that level with the price currently trading at 1.2290 going into the close. Watch 1.2314 in the new trading day. A move above would likely disappoint sellers on the break.

In the US, the markets were influenced by stronger initial jobless claims today. The weekly claims came in at 201K, much lower than the 225K estimate, and the lowest level since the end of March.

The Fed yesterday kept rates unchanged but remained concerned about inflation and employment which remains elevated (for inflation) and solid (for employment). The Fed lowered their estimate for the unemployment rate to 4.1% for the end of the year, and judging from today's data, they may have to lower it further given the strength.

The stronger claims data and the hangover from the commentary from the Fed's decision where they said that they would keep rates higher for longer sent yields higher - especially out the curve. A look at the yields:

  • 2-year yield rose 2.4 basis points to 5.143%
  • 5-year yield rose 10.6 basis points to 4.6.9 percent
  • 10-year yield rose 14.7 basis points to 4.496%
  • 30-year yield rose 17.9 basis points to 4.479%

That move took the 2 – 10 year spread to -64 basis points which is still well negative, but it was -87 basis points at the end of August. It makes you wonder if the yield curve will ever go positive again without the Fed cutting rates. I guess they have to put the economy into recession.

The higher rates sent stocks tumbling for the 2nd consecutive day. Moreover, the 3 major indices ALL closed below their 100 day moving averages for the 1st time since January 19 (the NASDAQ index closed below the 100-day moving average on that day). Bearish. The 3 major indices also closed near lows for the day for the 2nd consecutive day.

  • Dow Industrial Average closed at 34070.43. Its 100-day moving averages at 34268.38.
  • S&P closed at 4330.01. Its 100-day moving average is at 4375.38
  • NASDAQ and that closed at 13223.97. Its t 100-day moving average is at 13459.75

The prices of those major indices would need to close back above the 100-day moving average to tilt the bias back to the upside. Tomorrow will be a key day for the major indices.

In the forex market, the JPY is ending the day as the strongest of the major currencies (ahead of the BOJ rate decision on Friday). The CHF is the weakest. The USD is ending modestly higher with gains vs the GBP, CHF CAD and AUD. The USD fell vs the JPY and was unchanged versus the EUR and NZD.