On the defensive
Today's news headlines:
‘Fed officials keep hammering hawkish message on rates heading up’. A number of Federal Reserve officials reaffirmed the US central bank’s strong intent to pull inflation back to its 2% target yesterday. Median estimates of the 19 policymakers see at least another 1.25% of hikes by the end of 2022, which would take the benchmark rate north of 4%. There was also some pushback on the view that rates would begin to move lower next year; however restrictive monetary policy could extend into 2024 as core inflation remains stubbornly high. (Bloomberg)
‘Oil poised for biggest weekly rally since March on OPEC+ move’. The recent decision by OPEC+ to cut oil production by two million barrels per day is being viewed as a turning point in markets. Prices have been suppressed in the last two months as growth concerns and aggressive central bank tightening cycles have kept a lid on any more significant upside moves. The pressure is being felt by the Biden administration in the US heading into the November elections, as US consumers battle with record high fuel costs as the winter months approach; WTI is up nearly 10% on the week. (Bloomberg)
European markets have followed Asia lower this morning, with US equity futures also in the red. The Dollar is trading flat while Sovereign bond yields rise across the board. Markets will be focused on US Non-Farm Payrolls later today, with the weakest print since late 2020 expected.
German Industrial Production MoM (Aug): -0.8% (est. -0.5%)
German Retail Sales MoM (Aug): -1.3% (est. -1.2%)
UK Monetary Policy Committee Member David Ramsden speaks: 11:25AM
Canada Employment Change (Sep): 1:30PM
US Non-Farm Payrolls (Sep): 1:30PM
US Federal Open Market Committee Member John Williams speaks: 3:00PM
GBP/USD – 1.1157
GBP/EUR – 1.1388
EUR/USD – 0.9798
USD/CAD – 1.3737
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*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.