Dollar Declines Extend Post Powell, November No Longer Live But Future Rate Hikes Still on Table

Wall Street went on a mini rollercoaster ride during Fed Chair Powell’s speech.  Powell’s comments were mostly in-line with other officials and support the belief that policy might not be “too tight” and future rate hikes may be needed.  Powell’s comments support their higher for longer mantra, but fell short of signaling a rate hike was likely in December.  Until inflation is much lower, the Fed will try to jawbone the market into thinking more hikes are possible.

Fed Chair Powell Walked the Path His Colleagues Paved for Him

Fed chair Powell yesterday walked the path his colleagues had paved for him. In his widely anticipated speech at the Economic Club of New York, Powell said the recent rise in especially long‐term bond yields caused a tightening of general financial conditions which could lessen the need for a (final) rate hike.

Japanese Yen Stays Adrift, Core CPI Falls Below 3%

The Japanese yen is slightly lower on Friday. In the European session, USD/JPY is trading at 149.96, up 0.12%. The yen has shown little movement this week and continues to hover just shy of the symbolic 150 level. In early October, the yen breached 150 and then spiked sharply lower. It’s looking very likely that the yen will again breach 150 shortly.

Canadian Dollar Calm ahead of Retail Sales

Canada wraps up the week with the August retail sales report. The markets are bracing for a deceleration, with an estimate of -0.3% m/m, compared to a 0.3% gain in July. On a year-to-year basis, retail sales are projected to slow to 0.2%, down sharply from 2.0% in July.

Canada: Retail Sales Decline in August

Retail sales were weak in August, but with July's upward revisions this wasn't enough to put the third quarter's already modest consumer spending profile at risk. We expect personal consumption expenditure to be fairly anemic in the third quarter, advancing at only a 1-1.5% pace, in line with our internal spend data.

Sunset Market Commentary

The Chinese Ministry of Commerce today announced that it will require export permits for some graphite products that are used in batteries for electric vehicles.

Week Ahead – ECB Meeting and US GDP to Shake FX Markets

Crossing into the Eurozone, the central bank will announce its decision on Thursday. Markets are pricing in almost no chance of a rate increase, after the ECB signaled that rates have likely reached their peak for this cycle.

Week Ahead – US Retail Sales and UK CPI Data Enter the Sspotlight

The dollar traded on the back foot for the better half of this week due to dovish remarks by Fed officials who suggested that the surge in Treasury yields since they last met has done the work for them, implying that another hike before the end of the year may not be needed.

Canadian Inflation Expected to Edge Lower in September

Inflation data and the Bank of Canada’s closely-watched Business Outlook Survey will be front and center in a busy week of Canadian economic data releases. Canadian headline CPI growth is expected to edge down to 3.8% year-over-year in September from August’s 4% print. Year-over-year growth in energy prices likely accelerated – gasoline prices edged lower in September from August but were still up almost 7% from a year ago compared to a 1.5% year-over-year increase in August.

Weekly Economic & Financial Commentary: Inflation Continues to Gradually Drift Lower

The Consumer Price Index (CPI) rose 0.4% in September, a monthly change that was a bit softer than the 0.6% increase registered in August. The core CPI rose 0.3% during the month, a pace unchanged from the month prior. Overall, the cooling trend in inflation remains in place and price pressures are likely to ease further, in our view. That noted, a 0.5% rise in the Producer Price Index (PPI) shows that continued progress on inflation is likely to be slow.