Dollar Grinds Higher as Fed Commentary Keeps Rate Hike Bets Live

President of the Federal Reserve Bank of Minneapolis Neel Kashkari spoke yesterday afternoon and stated that price pressures remain elevated despite yesterday’s soft Personal Consumption Expenditure (PCE) numbers, thereby reinforcing the case for further interest rate hikes by year end. Traders have priced in a greater than 80% probability of a hike at the Fed’s December meeting. On the data front for today, Initial Jobless Claims for the week ending September 26th are due at 8:30am, and are expected to come in at 200k, a slight increase from the previous week’s figure of 197k. Continuing Jobless Claims for the week ending September 19th are also due and are expected to come in at 1725k.

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EUR

The Euro is down against the Dollar this morning ahead of the release of France’s latest budget later today. Traders are concerned about the fiscal trajectory of Europe’s second largest economy, which has been underperforming as of late, and that concern is spilling over as weakness in the Euro. French bonds have seen widening spreads against contemporaries for weeks, but the latest moves have been increasingly fast and disorderly, leading some Traders to begin considering the risk of contagion amid speculation that the European Central Bank may not be willing or able to intervene.

JPY

The Japanese Yen is leading G10 losses this morning following the release of the summary of opinions from the Bank of Japan’s September meeting. The summary did not provide any clear signal that the BoJ is preparing to hike interest rates again at consecutive meetings and has raised some concerns over their independence. The lack of a clear signal has seen Traders pare expectations of an October rate hike, pressuring the Yen.