Markets:
- Gold up $20 to $2628
- WTI crude oil up $2.71 to $75.96
- US 10-year yields flat at 4.07%
- S&P 500 down 0.2%
- JPY leads, CAD lags
It was a lively session feature some notable data and central bank speak. The market was uneven throughout, particularly in FX where the dollar appeared to rally on the CPI data and fall on the claims data. But a closer look at each data point revealed several caveats that largely neutralize them.
In the bond market, the action was in the front end. Two-year yields hit 4.05% before today’s US data but fell to 3.97% afterwards on worries about rising jobless claims, even if the report was full of hurricane and strike caveats. There is also ongoing concern about a war in the Middle East that may have lent a bid, even as Bostic floated the idea of pausing in November.
On a second look, Bostic said he had already penciled in just one further rate hike this year on the dot plot so his comment is hardly a change in stance. That may have contributed to some late-day US dollar selling that largely erased a larger move that had seen the euro touche the lowest in two months at 1.0901.
There is also some fresh talk of politics as polls show Trump shoring up support, including a late-day one from Tipp showing him ahead by a point in Pennsylvania. There isn’t a real consensus on Trump’s impact on the dollar but some of the equity-specific trades are moving in his favor, showing it’s not all betting site hi-jinx.
USD/CAD is another trade in focus after the seventh day of gains saw the pair touch 1.3775 before pulling back by 30 pips late. Oil and better China sentiment have failed to help the loonie and Friday is the Canadian jobs report and the latest BOC business outlook survey.
Cable got some attention after The Guardian reported on a Labour proposal to increase capital gains taxes. There wasn’t a big delta from the euro even as GBP fell, so it was likely more on the US side of the equation but the political moves in the UK are adding some intrigue. The pair touched a one-month low of 1.3023 before a 40-pip rebound late.
Finally, eyes are on Israel and a potential strike in Iran today ahead of shabat and Yom Kippur.
Brent crude, hourly: