The strongest and weakest of the major currencies

The AUD is the strongest and the CAD is the weakest as North American traders enter for the day. The USD is mixed ahead of the FOMC statement and decision. In the US, retail sales will be reported. In Canada, the monthly CPI data will be released. IN Washington, the debt limit was finally passed and won't be an issue until a year from now (after the elections).

The Fed is largely expected to speed up the taper to $30B per month. With the current pace at $105B, that would get to no bond buying near March and pave the way for tightening(s) assuming all goes well (uncertain). The Fed will also adjust their dot plot which would likely show 2 tightenings in 2022 (up toward 0.75% for the Fed funds target) vs near unchanged in the the September plot (proj 0.3% from 0.25% in September). The 2023 plot should likewise show a jump. In September it forecast a 1.0% rate. That should move toward 1.5% or so.

Rates in the US are modestly higher with a modest move higher in the yield curve as well.

The BOE will meet tomorrow and expectations for a hike were raised after inflation jumped to 5.1% (vs 4.7% estimates) The issue, is the impact from the spread of the omicron and it's economic impact.

Crude oil is lower on omicron fears of more lockdowns to control fast spreads. Crude oil settled at $70.73 yesterday and is currently trading at $69.95.

Bitcoin is steady. Gold is steady.

A snapshot of the other markets shows:

  • Spot gold is trading unchanged at $1770.44
  • Spot silver is down eight cents -0.37% at $21.84
  • WTI crude oil futures are trading down $0.78 at $69.95.
  • Bitcoin is trading at $47,722. That is down about $600 from the 5 PM price of $48,300

In the premarket for US stocks, the futures are implying modest changes:

  • Dow industrial average is up 15.82 points after yesterday's -106.77 point decline
  • S&P index is up four points after yesterday's -34.88 point decline
  • NASDAQ index is unchanged after yesterday's -175.64 point decline

In the European equity markets, the major indices are mixed:

  • German DAX, +0.34%
  • France's CAC, +0.65%
  • UK's FTSE 100 -0.2%
  • Spain's Ibex, -0.5%
  • Italy's FTSE MIB +0.5%

In the US debt market, the yields are higher ahead of the Fed decision with the longer end outpacing the shorter end.

US rates
The US rates are higher with the yield curve steepening

In the European debt market, the benchmark 10 year yields are also higher with the UK 10 year reacting to the higher inflation (up 4.2 basis points).

European 10 year yields
UK benchmark 10 year yields are higher on stronger CPI