Update from North America

Dollar Steady to Start the Week

2 min read

The U.S. Dollar is trading in mixed but steady ranges after President of the Federal Reserve Bank of Chicago, Austan Goolsbee, spoke at an event in London where he stated that the Fed’s 2% inflation target remains realistic despite recent supply shocks, but that restoring price stability ‘won’t be painless.’

It is going to be a relatively light week with regard to U.S. economic data, with the most notable releases being preliminary Purchasing Manager’s Index (PMI) numbers for the month of September on Wednesday morning, and Initial Jobless Claims for the week ending September 19th on Thursday morning. This leaves oil as a major driver of price action this week, and oil prices have notably slid from Friday’s close, with Brent Crude trading just over $101 per barrel, on track for its longest losing streak since June, and WTI hovering under $98 per barrel.

What to Watch This Week…

The complete Economic Calendar can be found here.

JPY

The Japanese Yen is down against the Buck this morning despite the Bank of Japan hiking interest rates on Friday to 1.25%, a 31-year high, and subsequently performing a rate check on USDJPY, an action often seen as a precursor to intervention. The hike was largely priced in, but many Traders were disappointed by the lack of forward guidance from Governor Ueda and by the 7-2 split vote, suggesting that the likelihood of a further rate hike this year may not be as guaranteed as was previously thought. The Japanese market is closed for the next three days, which is exacerbating weakness in the Yen.

EUR

The Euro is largely flat against the Dollar this morning as political risk becomes impossible to ignore. German Chancellor Freidrich Merz’s Christian Democratic Union (CDU) failed to reach the 5% vote threshold required to join the regional parliament in Mecklenburg-Western Pomerania over the weekend, only two weeks after it also suffered a stunning defeat in Saxony-Anhalt. We also saw France’s sovereign credit rating get downgraded by Scope Ratings on Friday after the French government said earlier that it would miss its deficit target. French and German 10-year yields are seeing a differential of around 100 bps for the first time in 14 years.