Daily analysis 10/07/2024

7. 10. 2024 - Josef Brynda

Latest news

• Focus on Chinese equity rally and earnings from PepsiCo, JPMorgan Chase, and Wells Fargo
• US dollar in focus due to strong US labour market data
• RBNZ expected to cut rates by 50 bps
• Crude oil trades softer but upside risks remain
• Markets bracing for inflation data following strong jobs report
• FOMC Minutes, US CPI, and US consumer sentiment are key economic data points
• September Nonfarm payrolls report exceeded expectations, adding 254,000 jobs
• Private payrolls increased by 223,000, beating consensus
• Wages rose 0.4% month-over-month and 4.0% year-over-year
• Unemployment rate dropped to 4.1%
• Market scaled back expectations from six to five rate cuts by June next year
• Q3 earnings season kicks off with PepsiCo, JPMorgan Chase, and Wells Fargo
• US obesity rate has fallen for the first time in many decades
• PepsiCo expected to show only 1.5% YoY revenue growth
• US equity market ended the week on a high note due to strong jobs report
• Chinese equity rally of 30% from September lows in focus
• US inflation report on Thursday important for market's pricing of future Fed policy rates
• Potential reversal of recent moves in equities expected
• US Treasury yields surged after strong jobs report
• Attention on upcoming US inflation data (CPI) and producer prices
• Central bank policy decisions from India, New Zealand, South Korea, and possibly Singapore in focus
• Commodities sector traded higher for a fourth week
• China to hold press conference on economic support measures
• Crude oil market watching moves from Israel on Hamas attack anniversary
• US dollar gained strength post-strong US jobs data
• Japanese yen had one of its weakest weeks since 2009
• New Zealand dollar may weaken due to expected RBNZ rate cut
• VIX currently at 19.21 (-6.25%)
• S&P 500 could swing around 85 points (~1.48%) over next five days
• Core CPI (MoM) forecasted at 0.2% and CPI (YoY) at 2.3%
• Q3 earnings season could influence market sentiment
• Geopolitical tensions in the Middle East remain a background risk

News summary

• The global financial markets are currently focused on several key developments, including a Chinese equity rally, upcoming earnings reports from major US companies, and significant economic data releases.
• The Chinese equity market has seen a remarkable 30% rally from its September lows, which is drawing considerable attention. This resurgence in Chinese stocks could potentially boost the Australian dollar (AUD) and New Zealand dollar (NZD) due to their economies' close ties with China. A stronger Chinese economy typically increases demand for Australian and New Zealand exports
• In the United States, the focus is on the upcoming earnings reports from major companies like PepsiCo, JPMorgan Chase, and Wells Fargo, marking the beginning of the Q3 earnings season. Strong earnings reports could bolster the US dollar, potentially putting pressure on currency pairs like EUR/USD
• The recent US jobs report exceeded expectations, with 254,000 jobs added in September and the unemployment rate dropping to 4.1%. This strong labor market data has led to a surge in US Treasury yields and strengthened the US dollar.
• Looking ahead, market participants are bracing for upcoming US inflation data, particularly the Consumer Price Index (CPI) report on Thursday. This data will be crucial in shaping expectations for future Federal Reserve policy rates. If inflation comes in higher than expected, it could further strengthen the US dollar
• In New Zealand, the Reserve Bank of New Zealand (RBNZ) is expected to cut rates by 50 basis points. This anticipated move could significantly weaken the New Zealand dollar, potentially leading to a sharp decline in the NZD/USD pair. This decision might also have spillover effects on the AUD/USD pair due to the close economic ties between Australia and New Zealand.
• The crude oil market is trading softer but remains subject to upside risks, particularly due to geopolitical tensions in the Middle East. Any significant movements in oil prices could impact the Canadian dollar, given Canada's status as a major oil exporter. 
• Lastly, the volatility index (VIX) is currently at 19.21, suggesting moderate market uncertainty. The S&P 500 is expected to potentially swing around 85 points (approximately 1.48%) over the next five days. These factors, combined with the upcoming Q3 earnings season and ongoing geopolitical tensions, could lead to increased volatility across all major currency pairs.

Daily analysis 10/02/2024

2. 10. 2024 - Josef Brynda

Latest news

• The US dollar gained strength as Fed Chair Powell dismissed expectations of imminent rate cuts.
• Geopolitical tensions in the Middle East boosted the dollar’s safe-haven appeal.
• The Canadian dollar rose, supported by higher oil prices following the Iran-Israel missile attack.
• The euro weakened below 1.11 against the US dollar, pressured by slowing inflation in the Eurozone.
• Expectations of an ECB rate cut in October also weighed on the euro’s performance.
• Sterling dropped below 1.33 against the dollar due to rising geopolitical risks and a strong US dollar.
• Safe-haven currencies like the Japanese yen and Swiss franc remained stable but did not see major gains.
• The New Zealand dollar fell over 1%, driven by expectations of significant rate cuts from the Reserve Bank of New Zealand.
• Market expectations of slower US rate cuts provided further support for the dollar.
• A stronger-than-expected US JOLTS report further fueled the dollar’s rise.
• Fluctuations in oil prices due to Middle East tensions affected commodity-linked currencies like the Canadian and Australian dollars.
• A risk-off sentiment in global markets strengthened demand for the US dollar.
• Weakening economic data from Europe continued to weigh on the euro.
• Political instability in Europe contributed to downward pressure on the euro.
• Inflation in the Eurozone dropping below the 2% target added to speculation of ECB monetary easing.
• The Iranian missile attack on Israel spurred increased demand for safe-haven currencies.
• The US dollar’s rise was bolstered by geopolitical concerns and higher US bond yields.
• The Swiss franc remained resilient but did not gain significantly, despite market volatility.
• Hawkish comments from Fed officials lifted the dollar against a basket of major currencies.
• Concerns over a broader conflict in the Middle East increased demand for the US dollar.
• The euro fell as markets priced in further rate cuts from the ECB.
• Weak Eurozone inflation numbers reinforced the dollar’s dominance over the euro.
• Sterling's decline was linked to market concerns over UK economic resilience and geopolitical tensions.
• The Japanese yen remained under pressure despite growing global risks.
• The US dollar remained firm amid speculation of slower global economic growth.
• Investor uncertainty over global central bank policies supported the US dollar.
• The Reserve Bank of New Zealand’s dovish stance contributed to a weaker New Zealand dollar.
• Increased volatility in global markets kept the US dollar in demand.
• US employment data bolstered the dollar as markets anticipated tighter Fed policies.
• The euro struggled as weaker-than-expected economic data heightened fears of recession in Europe.

News summary

• In light of the latest market developments, the US dollar (USD) is expected to maintain its upward momentum. Federal Reserve Chair Jerome Powell's recent remarks, which downplayed the likelihood of imminent rate cuts, provided solid support for the dollar, reinforcing its strength across global currencies. This hawkish stance has been further amplified by rising geopolitical tensions in the Middle East, specifically the missile exchanges between Iran and Israel. As these tensions escalate, investors have shifted towards safe-haven assets like the dollar, increasing its demand and boosting its value. The situation has had a notable impact on the EUR/USD pair, which continues to decline. The euro (EUR) is also under pressure due to slowing inflation within the Eurozone, which has sparked expectations of a rate cut by the European Central Bank (ECB) in October. With inflation falling below the 2% target, the euro has weakened below the key 1.11 level against the dollar, further driven by weaker-than-expected economic data from the region.
• The Canadian dollar (CAD), however, has experienced strength due to rising oil prices, which surged following news of the missile attacks between Iran and Israel. Given Canada's significant role as a major oil exporter, any upward movement in crude oil prices tends to positively influence the CAD. This has brought the USD/CAD pair closer to a stronger Canadian dollar as the demand for oil rises amidst fears of supply disruptions in the Middle East. While the CAD benefits from this dynamic, other commodity-linked currencies such as the Australian dollar (AUD) and New Zealand dollar (NZD) are facing headwinds. The NZD has been particularly weak, dropping by more than 1%, as markets expect substantial rate cuts from the Reserve Bank of New Zealand. Weak economic data and a softening labor market in New Zealand have led to heightened expectations of further monetary policy easing, which has put downward pressure on the NZD/USD pair.
• The British pound (GBP) has also weakened significantly, falling below 1.33 against the dollar. This decline is driven by two primary factors: the strength of the US dollar and growing geopolitical risks. The UK economy faces increasing uncertainty, with political instability and the global geopolitical landscape weighing heavily on investor sentiment. Concerns over the UK’s economic resilience, coupled with the broader geopolitical risks stemming from the Middle East conflict, have contributed to the decline in GBP/USD. Investors are wary that these risks, along with potential disruptions in global trade, could negatively impact the UK economy, leading to further downside pressure on the pound.
• Looking ahead, the outlook for major currency pairs remains tied to the strength of the US dollar. The EUR/USD, GBP/USD, and AUD/USD pairs are expected to continue facing downward pressure as the dollar remains the preferred safe-haven currency amidst geopolitical uncertainties and hawkish monetary policy expectations. The Canadian dollar, in contrast, may see further gains if oil prices continue to rise, driven by fears of supply disruptions in the Middle East. However, the New Zealand dollar is likely to remain under strain due to the dovish stance of the Reserve Bank of New Zealand, which could result in further monetary easing in response to weakening economic indicators. In the short term, the FX market is likely to be dominated by these geopolitical tensions, central bank policies, and commodity price fluctuations, all of which will play a crucial role in shaping currency movements.
   

Daily analysis 10/01/2024

1. 10. 2024 - Josef Brynda

Latest news

• Fed Chairman Powell's speech tilted hawkish as he stated that the Fed is not in a rush to cut rates quickly.
• Powell implied a 25bp rate cut in September and December, leaning back against expectations for another 50bp rate cut.
• Atlanta Fed President Bostic said that he is open to another 50bp rate cut if the labour market shows an unexpected weakness.
• China's PMI numbers offered a mixed snapshot of the economy, with manufacturing PMI remaining in contraction at 49.8.
• Germany inflation fell in September for a second straight month, supporting the case for an October rate cut.
• Euro-area inflation print is due today and is likely to confirm the disinflation trends seen in France, Italy and Germany.
• Bank of Japan's quarterly Tankan report showed sentiment among large Japanese manufacturers held steady.
• The US dollar traded higher as Fed's Chair Powell offered a pushback on aggressive market expectations of rate cuts.
• The US dollar ended September with a loss of over 3%.
• The Japanese yen led the losses against the US dollar.
• BOJ's summary of opinions highlighted a patient approach from the BOJ on raising rates further.
• The euro remains in focus as ECB's easing expectations continue to be re-assessed.
• Activity currencies Aussie dollar and kiwi dollar outperformed but seen losing momentum as China goes on Golden Week holiday.
• U.S. Treasuries dropped yesterday following comments from Federal Reserve Chair Jerome Powell.
• The market priced 70bp rate cuts by the end of the year versus 76bps by the end of last week.
• ECB President Christine Lagarde voiced confidence in curbing inflation, which helped reverse an earlier decline in European sovereign bonds.
• In Germany, inflation fell below 2% for the first time since 2021, raising expectations for a possible interest rate cut in October.
• The spread between Italian BTPs and French OATs remains stable.
• Gold traded lower on Monday after Powell reduced hopes for another bumper 50 bps rate cut in November.
• Crude remains rangebound near recent lows as the geopolitical risk bid remains absent.
• Focus now turns to JOLTs job openings today or the ISM manufacturing print to get a sense of labor market and economic activity.
• Macro events include Italy, France, Germany and UK Manufacturing PMI, Eurozone CPI, US Manufacturing PMI, and US JOLTS Opening.
• Israel decided to start land invasion in the southern parts of Lebanon yesterday, increasing geopolitical risks in the region.
• With the U.S. elections on the horizon, October could bring renewed volatility to markets.
• Euro Area Inflation Falls to 1.8%

News summary

• Federal Reserve Chairman Jerome Powell's recent speech took a hawkish tone, indicating that the Fed is not rushing to cut interest rates quickly. Powell suggested the possibility of 25 basis point rate cuts in September and December, which is less aggressive than market expectations for another 50 basis point cut. This stance has led to a strengthening of the US dollar, as it traded higher following Powell's comments.
• The dollar is likely to maintain its strength in the near term, especially against currencies of countries with more dovish central bank policies. However, the overall trend for 2024 might still be downward if the Fed does proceed with rate cuts, albeit at a slower pace than initially expected.
• Recent economic data from Europe has been mixed but generally points towards disinflation. Germany's inflation fell in September for the second consecutive month, dropping below 2% for the first time since 2021. This trend is expected to be confirmed in the upcoming Euro-area inflation print, following similar patterns observed in France and Italy.
• The euro remains in focus as markets reassess ECB easing expectations. The currency may face downward pressure in the short term due to the increasing likelihood of rate cuts. However, if inflation continues to moderate without significant economic deterioration, the EUR could find support.
• These activity currencies have outperformed recently but are seen losing momentum as China enters its Golden Week holiday. China's mixed PMI numbers, with manufacturing remaining in contraction, could also impact these currencies.Impact on AUD and NZD: Both currencies may face headwinds due to concerns about Chinese economic growth and reduced trading activity during the holiday period.
• While specific news about the UK was limited in the provided information, the global economic trends and central bank policies will likely influence the pound.Impact on GBP: The pound may find some support against the euro if the ECB moves towards rate cuts faster than the Bank of England, but could struggle against a stronger dollar.
• The Canadian dollar wasn't specifically mentioned, but as an oil-linked currency, it could be affected by crude oil prices remaining rangebound near recent lows.Impact on CAD: The Canadian dollar may remain relatively stable, with potential for weakness if oil prices don't recover and if the US dollar continues to strengthen.

  In conclusion, the forex market is likely to be driven by central bank policies, inflation data, and global economic indicators in the coming months. The US dollar appears positioned for near-term strength, but longer-term trends will depend on how economic data evolves and how central banks adjust their policies in response.

Daily analysis 09/30/2024

30. 9. 2024 - Josef Brynda

Latest news

• Chinese equities surged while Japanese stocks slumped, potentially impacting related currency pairs.
• The Japanese yen jumped due to Shigeru Ishiba's nomination, surprising forex traders.
• Crude oil prices edged higher on Middle East tensions, which could affect commodity-linked currencies.
• Markets are anticipating key U.S. job data this week, likely to influence USD pairs.
• UK house prices, German CPI, and Chicago PMI data are due, potentially moving GBP and EUR.
• China plans to cut existing mortgage rates by the end of October, which may impact CNY.
• European shares closed at a record high, boosted by luxury stocks rallying on China stimulus.
• U.S. equity futures indicate a steady opening, potentially stabilizing USD.
• The U.S. August PCE index showed mild inflation, raising expectations for a potential Fed rate cut.
• U.S. Treasury yields dropped, with the 10-year yield around 3.75%, affecting interest rate differentials.
• The Bloomberg Commodity Index reached a two-month high, supporting commodity currencies.
• Copper's rally extended on Chinese property market optimism, potentially boosting AUD and NZD.
• The U.S. dollar ended lower for the fourth consecutive week, impacting major currency pairs.
• Risk-on sentiment prevailed due to Chinese stimulus measures, benefiting commodity currencies.
• The euro ended flat as markets assess the ECB's rate cut path, with German flash inflation data due.
• Market volatility is increasing, with the VIX up 10.34%, potentially affecting currency volatility.
• Fed Chair Powell is set to speak, which could move USD pairs.
• Options pricing suggests significant expected moves in major indices, indicating potential forex volatility.
• U.S. Manufacturing PMI data is expected to provide economic direction, likely impacting USD.
• The Hang Seng Index's continued surge may influence Asian currencies and risk sentiment.
• UK 10-Year Gilt Yield Climbs to 4-Week High
• Bonds Update: Australia 10Y Bond Yield Gains by 5 bps
• UK Consumer Credit Growth at 3-Month High
• FX Updates: Euro Increases by 0.38%
• German 10-Year Bund Yield Moves Up Ahead Inflation Data
• UK Stocks Edge Lower
• Palestine GDP Shrinks 32% in Q2 2024
• British Pound Holds at 2022-Highs

News summary

• In Asia, Chinese equities surged on the back of planned mortgage rate cuts and stimulus measures, boosting risk appetite and potentially supporting commodity currencies like the Australian and New Zealand dollars. This optimism is further reinforced by copper's extended rally, which could provide additional support to the AUD and NZD. Conversely, Japanese stocks slumped, and the yen jumped following Shigeru Ishiba's nomination, surprising forex traders and potentially strengthening the JPY against major currencies
• The U.S. dollar has been under pressure, ending lower for the fourth consecutive week. This weakness in the USD is likely to benefit the EUR/USD pair, it will depend on how the german data go. It could break the up trand, if the upcoming German CPI data shows signs of cooling inflation. The euro ended flat as markets assess the European Central Bank's rate cut path, but positive economic data from the Eurozone could provide support to the common currency.
• Crude oil prices edged higher due to Middle East tensions, which could affect commodity-linked currencies such as the Canadian dollar. This, combined with the Bloomberg Commodity Index reaching a two-month high, may support the CAD against its major counterparts, potentially putting pressure on pairs like USD/CAD, AUD/CAD, and NZD/CAD.
• The British pound is holding at 2022 highs, supported by rising UK 10-Year Gilt yields and stronger consumer credit growth. This strength in the GBP could lead to a decline in the EUR/GBP pair, especially if upcoming UK economic data, including house prices, continues to show resilience.
• U.S. economic indicators are mixed, with the August PCE index showing mild inflation and raising expectations for a potential Fed rate cut. This, coupled with dropping U.S. Treasury yields, is likely to keep the USD under pressure across major pairs. However, the market is closely watching upcoming U.S. job data and Manufacturing PMI, which could provide direction for the greenback.
• Risk sentiment remains generally positive, driven by Chinese stimulus measures and the surge in the Hang Seng Index. This environment is likely to benefit commodity currencies and emerging market currencies at the expense of safe-haven assets like the USD and JPY.
• Increased market volatility, as indicated by the rise in the VIX index and options pricing suggesting significant expected moves in major indices, could lead to heightened currency volatility. Traders should be prepared for potential sharp moves in currency pairs, especially around key economic data releases and central bank communications.

  In summary, the current market conditions suggest potential weakness in the USD, strength in commodity currencies (AUD, NZD, CAD), and a mixed outlook for the EUR and GBP. The EUR/USD pair may see upside movement, while USD/CAD could face downward pressure. AUD/CAD and NZD/CAD might experience volatility as both commodity currencies and the CAD find support. The EUR/GBP pair could decline if the GBP continues to outperform. Traders should remain vigilant, as upcoming economic data and central bank speeches, particularly from Fed Chair Powell, have the potential to significantly impact these currency dynamics in the short term.

China’s Politburo Supercharges Stimulus With Housing, Rates Vows

26. 9. 2024 - Josef Brynda

China’s top leaders ramped up efforts to revive growth with pledges to support fiscal spending and stabilize the beleaguered property sector, giving new momentum to stimulus measures aimed at arresting a slowdown in the world’s second-largest economy.

President Xi Jinping’s huddle of the 24-man Politburo concluded with a promise to strive to achieve the country’s annual economic goals, the official Xinhua News Agency reported Thursday. Officials pledged action to make the real estate market “stop declining,” their strongest vow yet to stabilize the crucial sector after new-home prices fell in August at the fastest pace since 2014.

The government will also strictly limit the construction of new-home projects, the Politburo said, as part of efforts to ease residential oversupply — although such building has ground to a near-halt.

Daily analysis 09/26/2024

26. 9. 2024 - Josef Brynda

Latest news

• The yen weakened to 145 against the dollar.
• The Swiss National Bank is expected to cut rates, with focus on their language regarding franc strength.
• Sweden's Riksbank cut rates for the third time and guided for further cuts this year.
• Markets are pricing in a 50% probability of an ECB rate cut in October.
• The US dollar traded higher, supported by short covering and safe-haven appeal.
• Activity currencies led losses against the US dollar, with kiwi and Aussie dollars declining.
• The Euro traded lower after once again finding formidable resistance around 1.12 against the dollar.
• Investors await Fed Chair Powell's comments for insights on potential future rate adjustments.
• Key economic data, including Durable Goods Orders and GDP growth figures, will be released this afternoon.
• Japanese yen and Swiss franc were in red despite being safe-havens.
• The kiwi dollar plunged back below 63 cents.
• The Aussie dollar fell back below 0.6850.
• US new home sales data could impact USD sentiment.
• China's potential injection of 1 trillion yuan into state banks may affect CNY and related currencies.
• Crude oil price drop could influence commodity-linked currencies.
• European sovereign bond yields rising may impact EUR and other European currencies.
• US Treasury yield movements could affect USD strength.
• Gold holding near record levels despite USD recovery may influence gold-linked currencies.
• Focus returns to the Fed as Chair Powell and NY Fed's Williams are set to speak.
• Weekly US jobless claims data release could impact USD and overall forex market sentiment.
• US new home sales fell 4.7% in August but were above expectations.
• European equities are up 1.4%, driven by gains in ASML and LVMH.
• US futures indicate a 0.7% higher open.
• In the options market, Nvidia, Tesla, and Apple continue to dominate, joined by Intel, Micron Technology, and Meta Platforms.

News summary

• The forex market experienced significant movements across various currency pairs. The Japanese yen weakened to 145 against the dollar, while the Swiss franc and other safe-haven currencies unexpectedly declined despite their typical resilience. This shift suggests a complex interplay of factors affecting traditional safe-haven assets. Meanwhile, the US dollar traded higher, benefiting from short covering and its safe-haven appeal, which put pressure on other major currencies.
• European central banks are making notable policy shifts. The Swiss National Bank is anticipated to cut rates, with markets closely watching their language regarding franc strength. Sweden's Riksbank has already cut rates for the third time and signaled further cuts this year. Additionally, there's a 50% probability priced in for an ECB rate cut in October. These developments are likely to impact the EUR/USD, EUR/GBP, and other euro-related pairs, potentially weakening the euro in the short term.
• Activity currencies faced significant losses against the strengthening US dollar. The New Zealand dollar (kiwi) plunged below 63 cents, while the Australian dollar fell below 0.6850. This trend affected pairs such as AUD/NZD, AUD/CAD, and AUD/USD, with commodity-linked currencies particularly vulnerable due to falling crude oil prices. The euro also traded lower after encountering strong resistance around 1.12 against the dollar, impacting the EUR/USD pair.
• Investors are keenly awaiting comments from Fed Chair Powell and upcoming economic data, including Durable Goods Orders and GDP growth figures. These factors could significantly influence USD pairs like USD/CAD and EUR/USD. Additionally, the potential injection of 1 trillion yuan into Chinese state banks may affect CNY and related currencies, potentially impacting AUD/USD and NZD/USD due to China's economic influence on these commodity currencies.
• In the broader financial landscape, European equities are up 1.4%, driven by gains in key stocks like ASML and LVMH. US futures indicate a higher open, which could influence risk sentiment in the forex market. The options market activity in tech stocks like Nvidia, Tesla, and Apple may also indirectly affect currency pairs through overall market sentiment.
• The movement in bond yields, with European sovereign bond yields rising and potential shifts in US Treasury yields, could have significant implications for currency pairs. Rising yields typically strengthen a currency, potentially supporting the euro against other currencies in pairs like EUR/GBP and EUR/USD, while movements in US yields could further bolster or weaken the dollar's position.
• Lastly, the resilience of gold prices near record levels, despite the USD recovery, may influence gold-linked currencies and overall forex market dynamics. The upcoming speeches by Fed Chair Powell and NY Fed's Williams, along with the release of weekly US jobless claims data, are expected to provide further direction for the USD and overall forex market sentiment, potentially causing volatility across major currency pairs.
   

What's moving markets

25. 9. 2024 - Josef Brynda

Market Overview

• S&P 500 futures -0.2%, Dow futures -0.2%, Nasdaq 100 futures -0.4% following S&P 500's record high.
• US consumer confidence unexpectedly dropped in September due to labor market concerns.

Federal Reserve Focus

• Fed Governor Adriana Kugler to speak, markets await her stance on recent rate cut.
• Contrasting views among Fed officials: Bowman defended smaller cut, others supported larger reduction.

Corporate News

• US government probing SAP and Carahsoft for potential price fixing in government sales.

Commodities

• Gold hit record $2,670.43/oz before slight retreat, supported by rate cut expectations.
• Oil prices dipped: Brent -0.5% to $74.08, WTI -0.7% to $71.08, as traders reassess China's stimulus impact.

These developments may influence forex markets, affecting USD strength, commodity currencies, and overall market sentiment.

Daily analysis 09/25/2024

25. 9. 2024 - Josef Brynda

Latest news

• Chinese equities are rising due to a significant stimulus package, which could impact global currency markets.
• Growing expectations of rate cuts in both Europe and the U.S. are driving yields lower, which could affect currency valuations.
• The Riksbank's policy decision and U.S. new home sales data are upcoming economic events that may influence forex markets.
• Australia's August CPI eased to 2.7%, potentially setting up a dovish pivot at the RBA's November meeting, which could impact the Australian dollar.
• U.S. consumer confidence showed worries about the labor market, which is a key focus for the Fed and could influence USD movements.
• Fed Governor Bowman's hawkish stance contrasts with Governor Waller's dovish view, creating uncertainty in future Fed policy decisions.
• The European Central Bank (ECB) is now seen as having a 60% chance of a quarter-point rate cut as soon as October, potentially affecting the euro.
• Industrial metals have jumped on China's stimulus, which could impact commodity-linked currencies.
• Crude oil prices are struggling to gain a foothold above key levels despite Middle East tensions and China stimulus, potentially affecting oil-linked currencies.
• The risk-on environment got another boost from China's stimulus measures, weakening the US dollar across the board.
• The Japanese yen underperformed in the risk-on environment, also affected by BOJ's cautious stance on further rate hikes.
• Volatility is easing, with the VIX down to 15.39, which could impact currency pair movements.
• Tesla's high IV Rank in options trading suggests potential for increased volatility, which could spill over into currency markets.
• Attention may remain on global news and geopolitical events, which often drive forex market movements.
• The German yield curve steepened, with the two-year yield dropping to its lowest level since 2022, potentially impacting the euro.
• UK gilt yields rose slightly as Andrew Bailey remained cautious about future rate cuts, which could affect GBP movements.
• Silver jumped but struggled above USD 32, supported by industrial metals and gold reaching a fresh record, potentially impacting precious metal-linked currencies.
• The Bloomberg Commodity Total Return Index is up 4.7% on the month, which could influence commodity currencies.
• Micron Technology's earnings report could provide insights into global demand, potentially affecting tech-heavy currencies.
• Spotify's shares rose on TikTok exiting the music streaming business, which could impact tech sector performance and related currencies.
• Saab shares plunged 9% on slowing momentum, highlighting potential shifts in the defense sector that could affect certain currencies.
• The Australian dollar was choppy following mixed signals from the RBA, but eventually pushed above 0.69 overnight before retreating.
• The Australian and New Zealand dollars reached multi-month highs, while the yuan hit its strongest level in over a year, driven by China's aggressive stimulus package.
• The U.S. dollar faced pressure due to China's stimulus measures and growing expectations of another large U.S. rate cut in November.
• Australian consumer prices slowed to a three-year low in August, with core inflation hitting its lowest since early 2022, potentially influencing AUD movements.
• China's latest support measures, including outsized rate cuts and stock market aid, boosted investor sentiment globally.
• The People's Bank of China lowered the cost of medium-term loans to banks, further supporting easing measures.
• Sterling advanced to levels not seen since March 2022, supported by less aggressive rate cut expectations from the Bank of England compared to the Federal Reserve.
• Markets are pricing in a 59.5% chance of a 50-basis-point rate cut at the Fed's next policy meeting, up from 37% a week ago.
• U.S. consumer confidence unexpectedly fell in September, raising concerns about the labor market's health.
• The dollar index approached a more than one-year low, experiencing its largest one-day percentage fall in a month.
• The euro neared a 13-month high, while the yen slightly weakened against the dollar.

News summary

• The recent announcement of a significant stimulus package in China has sparked a rally in Chinese equities, which is likely to have far-reaching effects on global currency markets. This stimulus is expected to boost the Chinese yuan, which has already hit its strongest level in over a year. The Australian and New Zealand dollars, closely tied to China's economic performance, have reached multi-month highs as a result. This development could lead to continued strength in commodity-linked currencies, particularly those of countries with strong trade ties to China.
• Growing expectations of rate cuts in both Europe and the U.S. are driving yields lower, which is likely to have a significant impact on currency valuations. The European Central Bank (ECB) is now seen as having a 60% chance of a quarter-point rate cut as soon as October, potentially weakening the euro in the short term. However, the euro has neared a 13-month high against the dollar, suggesting that the relative pace of rate cuts between the ECB and the Fed will be crucial in determining the EURUSD pair's direction.
• In the U.S., markets are pricing in a 59.5% chance of a 50-basis-point rate cut at the Fed's next policy meeting, up from 37% a week ago. This expectation, coupled with concerns about the U.S. labor market following unexpected declines in consumer confidence, could further weaken the USD against major currencies.
• The jump in industrial metals prices due to China's stimulus is likely to have a positive impact on commodity-linked currencies. The Australian dollar, in particular, could benefit from this trend, potentially seeing further gains in pairs like AUDUSD and AUDNZD. However, the mixed signals from the Reserve Bank of Australia (RBA) and the recent easing of inflation to a three-year low in August could introduce some volatility to AUD pairs.The New Zealand dollar has also strengthened on the back of the Chinese stimulus, which could lead to interesting movements in pairs like NZDCAD. The Canadian dollar's performance may be more nuanced, as it balances the positive impact of industrial metal prices against the struggling crude oil prices, which are failing to gain a foothold above key levels despite Middle East tensions.
• Sterling has advanced to levels not seen since March 2022, supported by less aggressive rate cut expectations from the Bank of England compared to the Federal Reserve. This could lead to further strength in pairs like EURGBP, especially if the ECB moves faster on rate cuts than the BoE.The German yield curve steepening, with the two-year yield dropping to its lowest level since 2022, could add pressure to the euro. However, the currency's performance against the dollar (EURUSD) may remain strong if the Fed is perceived as more dovish than the ECB.
• The Japanese yen has underperformed in the current risk-on environment, also affected by the Bank of Japan's cautious stance on further rate hikes. This could lead to weakness in yen pairs, particularly against currencies benefiting from the improved global economic outlook.
• The forex market is currently being driven by a complex interplay of factors, including China's stimulus, shifting interest rate expectations, commodity price movements, and varying central bank stances. Traders should closely monitor upcoming economic events such as the Riksbank's policy decision and U.S. new home sales data, as well as geopolitical developments, as these could introduce further volatility into currency pairs. The overall trend appears to favor risk-on currencies and those benefiting from China's economic boost, while safe-haven currencies like the USD may face continued pressure in the near term.