Currency markets are pretty much unchanged today as traders await tomorrow’s FOMC decision, although Sterling did try and make a bit of a recovery after UK Brexit Minister Raab tried to talk down any disagreement with EU. The Euro also briefly made a new trend high after a hawkish Mario Draghi stated that he sees a ‘vigorous pick-up in underlying inflation’ despite the latest ECB forecast (from just 2 weeks ago) falling short of 2% goal. Focus will now be on the German CPI Thursday. Also helping the Euro in European trade on Monday, the German IFO Business Climate Index dropped -0.1 to 103.7 in September but beat expectations of 103.2, while the Business Expectations index dropped -0.2 to 101.0, also above expectations of 100.5.
US stocks were a little lower, the metals unchanged, but WTI rallied strongly, by 2%, after Saudi Arabia and Russia both ruled out any immediate increase in production despite calls by Donald Trump for action to raise global supply. Traders are also concerned about dwindling supply from Iran and Venezuela, so further upside momentum would not surprise in the days ahead. Elsewhere, US yields remain strong, with the 10Y currently trading at 3.091% and helped to underpin the US$ later in the Monday session..
Tuesday will see a thin calendar but will kick off with NZ Monthly inflation Gauge for August. The main event of the whole session will be the BOJ Minutes and a speech from the Governor, Kuroda, but with nothing at all of note to come from Europe (German WPI) except speeches from the ECB’s Coeure and Praet and also from the BOE’s Vlieghe. The US session will also be pretty quiet but will feature the Case Shiller House Price Index, the July House Price Index and the Richmond Fed Mfg Index. Traders will generally have their eyes on tomorrows Fed outcome and future outlook, so it may stay rangebound until then unless the trade war flares up again, care of the Trump Twitter account. Have a good day.
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