The strongest to the weakest of the major currencies

The NZD is the strongest and the JPY is the weakest as the North American session begins. The USD is weaker with one day to go (2 PM on Wednesday) before the rate decision from the FOMC and all that will go with it including the new dot plot, and the central tendencies (lower inflation forecasts?). Recall last week, US CPI for August August saw the fastest price growth in 14 months, primarily due to a rise in petrol prices. However, when excluding food and fuel, the annual "core" rate was the lowest in two years. These figures have reinforced the belief that the Federal Reserve (Fed) will not resume its tightening measures in September. The market is pricing a less than 40% chance of interest rates increasing this year. Despite this, rising costs in car and health insurance, coupled with potential hikes in vehicle prices due to an ongoing auto workers strike, have led some economists to anticipate further inflationary pressures going forward. What will the Fed think?

In Australia overnight the RBA meeting minutes indicated there may be some further tightening needed.

US rates are little changed after yields moved to a multi-year highs yesterday at parts of the yield curve (the high for the 30 year was just short of the high yield of 4.474% reached in August). US stocks are marginally higher. Instacart will go public. The IPO price was set at $30 for a market capitalization of about $9.9 billion. At its peak during the covid crisis, it was priced at $39 billion. Regarding the UAW strike, there is the possibility for more work stoppages announced on Friday as per UAW's president Shawn Fain. Walkouts at plants in Michigan, Ohio and Missouri have already halted production of some popular models.

Today, on the economic calendar, Canada CPI (MoM 0.3% and YoY 3.8% versus 3.3% last month) will be the focus at 8:30 AM ET with US building permits and housing starts also scheduled for release at that time (building permits 1.443M estimate vs 1.442M last month and housing starts 1.440M estimate vs 1.452M last month).

A snapshot of the markets as the NA session gets underway shows:

  • Crude oil is trading up $0.54 or 0.60% at $91.12
  • Spot gold is trading up $1.90 or 0.10% at $1934.85
  • Spot silver is trading up $0.11 or 0.46% at $23.33
  • Bitcoin is trading at $27,218. At this time yesterday, the price was trading at $27,160. The high price today reached $27,459 which was marginally higher than the high price from yesterday at $27,422

In the US premarket for US stocks, major indices are trading modestly higher after closing near unchanged yesterday

  • Dow Industrial Average futures are implying a rise of 18.90 points after yesterday's 6.06 point rise
  • S&P index futures are implying a gain of 4.97 points after yesterday's 3.19 point rise
  • NASDAQ futures are implying a gain of 17.63 points after yesterday's 1.90 point rise

In the European equity markets, the major indices are mixed

  • German DAX, -0.17%
  • France's CAC, +0.17%
  • UK's FTSE 100, +0.05%
  • Spain's Ibex, +0.44%
  • Italy's FTSE MIB, +0.53% (delayed)

In the Asian Pacific today, equity markets closed mixed

  • Japan’s Nikkei 225, fell -0.87%
  • China’s Shanghai Composite, fell -0.03%
  • Hong Kong’s Hang Seng, rose 0.37%
  • Australia’s S&P/ASX 200, fell -0.47%

In the US debt market, yields are mixed/little changed.

  • 2-year yield, 5.060%, -0.4 basis points
  • 5-year yield, 4.461% unchanged
  • 10-year yield, 4.324% +0.6 basis points
  • 30-year yield, 4.406% +1.0 basis points

In the European debt market, benchmark 10-year yields are trading lower.

European benchmark 10 year yields