Sunset Market Commentary

Today centered around US September CPI inflation numbers. They printed… nearly bang in line with consensus. Headline CPI rose by 0.4% M/M (vs 0.3%) while core CPI increased 0.3% M/M (in line). The headline Y/Y-figure stabilized at 3.7%. The core slowed as forecast from 4.3% to 4.1%.

Germany: What Drives Recent Divergence Between Employment and GDP?

The German labour market has remained remarkably strong despite weak economic activity overall. While GDP has fallen since 2022Q3 employment has increased continuously.

USD/JPY: Surging Treasury Yields Bring Back Pressure onto Japanese Officials

The BOJ must be frustrated that the yen’s rally at the start of the month has quickly evaporated. Pressure is growing for the Japanese officials to act otherwise, the yen could see another significant devaluation. Last night, Bank of Japan board member Noguchi noted that yield curve control is difficult to maintain without acting early when changes are needed. The pressure is building for the BOJ to do something and if the yen weakens beyond the 150 level, an abrupt action might need to occur.

US Yields and Dollar Jump on Hotter-than-Expected CPI

US inflation data wasn’t very soothing for investors at yesterday’s release. The headline inflation remained steady at 3.7%, while initial jobless claims came in soft, after last Friday’s shocker NFP showed 336K new nonfarm job additions. The data softened the Federal Reserve (Fed) doves’ hand. The US 2-year yield jumped past the 5% level, while the 10-year yield returned above the 4.70% mark and the 30-year jumped 18 bp to above 4.80% after a $20 billion auction saw weak demand.

Dollar Again in Pole Position

Giving lingering geopolitical tensions and the equity rally running into resistance, the dollar is again in pole position. The EUR/USD 1.0448 correction low might come on the radar again. Als keep an eye at the start of the US earnings season with several major banks reporting today.

New Zealand Dollar Extends Losses after Plunge

The New Zealand dollar is lower on Friday after a massive plunge a day earlier. In the European session, NZD/USD is trading at 0.5911, down 0.25%.

USD/JPY Heads Closer to 150 after US Inflation Report

Earlier in the month, the yen spiked higher after breaching 150 and the markets were abuzz with speculation that the Ministry of Finance (MOF) had intervened to prop up the yen. The MoF kept the markets guessing, as it likes to do, but the central bank’s money market data indicated that it likely did not intervene. Still, the 150 line remains a psychologically important level and another breach could trigger volatility from the Japanese currency.

Aussie Stabilizes after Sliding on US Inflation

The Australian dollar is unchanged on Friday, trading at 0.6312. The Aussie was roughed up by the US dollar a day earlier and plummeted 1.56%, its largest one-day decline since August.

Sunset Market Commentary

Geopolitical tensions run ever higher after Israel called for an evacuation of all civilians in Gaza City, indicating the country is preparing for a ground invasion. Such a move would bring the clash in the Middle East into a new stage. While markets dismissed the conflict quickly earlier this week, they obviously remain vulnerable for any escalation. It’s no surprise then, that they err on the side of caution going into a weekend full of uncertainties.

USD/CAD Unchanged as Canada, US Post Strong Job Numbers

The Canadian dollar is showing limited movement on Friday. In the North American session, USD/CAD is trading at 1.3705, almost unchanged. USD/CAD gained ground immediately after the nonfarm payroll report but has given up these gains.