British Pounds Shrugs as CPI Remains Steady

Today’s UK inflation report showed little change from a month ago, a reminder that the battle to curb inflation will be a long one. Headline CPI was unchanged in September at 6.7%, remaining at its lowest level in 18 months, but above the market estimate of 6.6%. Month-to-month, headline CPI rose 0.5%, up from 0.3% in August. A sharp rise in gasoline prices was the main driver of September inflation, which was partially offset by a decline in food prices.

Will Eurozone PMIs Corroborate Speculation of ECB Rate Cuts in 2024?

At its September meeting, the European Central Bank (ECB) decided to raise interest rates by another 25bps, lifting the deposit facility rate to a record high of 4%. Nonetheless, with data heading into the meeting pointing to profound cracks in the Euro area economy, officials hinted that this could be the last rate increase in this tightening cycle.

USD/JPY: Dollar Holds Gains Post 20-Year Auction and Beige Book

The dollar is holding onto most of its gains as the surge in Treasury yields stalls after a historic bond market slide. A 20-year bond auction saw strong demand, bucking the tepid demand we saw last week. This auction was awarded at 5.245%, which is 65 bps more than what happened in September. Investors are still buying bonds, but geopolitical risks and US deficit concerns, along with a potential government shutdown could keep yields rising.

Final Countdown to Swiss 2023 General Election

Switzerland rarely makes headlines but the Federal election, which is scheduled to take place on Sunday October 22 might be worthy to have a look even though the impact on the Swiss Franc could be negligible.

Risk Sentiment Remains Sour

Overall, market sentiment remained sour yesterday, with equity markets falling, 10y UST yield soon approaching 5% and broad USD strengthening. The most recent Fed speakers, including Waller and Harker yesterday, have communicated that the Fed has room to continue monitoring effects of past tightening by extending the September pause into November.

Stocks Fall on Earnings, Surging Rates, and Higher Oil Prices

US stocks are declining on soft earnings, rising rates, and as the risks grow for a potential widening of the Israel-Hamas conflict. Today’s round of earnings from Morgan Stanley, JB Hunt, and United Airlines told a story of a weakening economy that has rising costs drive a weakening profit outlook. Investors are scrambling into safety as the next quarter looks like it has a lot of turbulence for earnings.

Aussie Slips on Soft Employment Data

The Australian dollar has extended its losses on Thursday. In the North American session, AUD/USD is trading at 0.6312, down 0.37%.

GBP/USD Flat as Retail Sales Eyed

The British pound is drifting on Thursday. In the North American session, GBP/USD is trading at 1.2142, almost unchanged. The UK inflation report on Wednesday was a stark reminder that inflation remains stubborn and sticky. The Bank of England has raised the benchmark rate to 5.25%, but headline inflation was steady at 6.7% y/y and the core rate ticked lower to 6.1%, down from 6.2%. Both readings were higher than expected disappointed investors sent the British pound lower on Wednesday.

Gold Rises Against the Tide, But Energy Running Out

Gold is trading at nearly $1950 an ounce, having surged since the end of July after hitting $1810 just under two weeks ago on October 6th.

Euro Rises, US Jobless Claims Drop

The euro has bounced back on Thursday, erasing the losses from a day earlier. In the North American session, EUR/USD is trading at 1.0573, up 0.36%.