It was a day of very light news and data flow.

The Reserve Bank of Australia meet next week, Tuesday 4 October (statement is due at 0330 GMT that day), and today’s retail sales data, up 0.6% m/m (ahead of the central estimate) and up 19% y/y (the second-largest increase y/y in the history of the data series) keeps a 50bp rate hike well and truly on the front burner. Australian consumer confidence has been very, very weak. This is not being reflected in strong retail sales data.

Market movements were dominated by rising US yields, the 10-year hitting over 4% (for the first time since back in 2010), and US dollar strength. Comments from US Treasury Secretary Yellen and White House Economic Adviser Deese shrugging off the strong US dollar (see bullets above) did not hinder the rising USD.

In central bank news we had Bank of Japan July meeting minutes (a bit stale these, see bullets above) and head of the San Francisco Federal Reserve Mary Daly saying the goal is to bring inflation down without tipping the economy into recession unnecessarily.

The US dollar rose pretty much across the majors board today. Offshore yuan fell, with USD/CNH above 7.2 and its highest (lowest for CNH) ever. USD/JPY was a bit of a laggard, with some reservations about taking it higher due to the niggling threat of intervention. EUR, AUD, GBP, NZD, CHF, CAD … all were lower and offering a safer trade.

USD index:

usd dxy 28 September 2022