Eurozone Inflation Revised Lower, OECD Downgrades Growth, RBA Considered Another Hike

Eurozone headline inflation was slightly lower than initially reported in August while core was unrevised and is now modestly higher. Both are expected to fall going into next year and today's revisions are unlikely to alter the view of the ECB which has already decided that no more rate hikes will likely be needed. As with all favourable data though, it may come as a small relief that surprises in the data are finally in the right direction.

Crypto Market Fails to Accelerate Its Growth

Bitcoin hit $27.4K on Monday for the first time since late August but quickly pulled back to $26.8K. This was the second failed attempt to break above the 50-day moving average since early August and the second downward reversal on the approach to the 200-day MA. This is an important signal that the bears are still in control of the situation in the largest cryptocurrency, even though they gave some space to “play” as we expected yesterday.

EUR/USD – Edges Higher Even as Eurozone Inflation Revised Slightly Lower

Eurozone headline inflation was slightly lower than initially reported in August while core was unrevised and is now modestly higher. Both are expected to fall going into next year and today’s revisions are unlikely to alter the view of the ECB which has already decided that no more rate hikes will likely be needed. As with all favorable data though, it may come as a small relief that surprises in the data are finally in the right direction.

Canada: Inflation Mercury Spikes to 4% in August 

Headline inflation moving back up to 4% on higher energy prices would likely be tolerated by the Bank of Canada. But, core inflation measures heating back up to 4% y/y, and 4.5% on a three month annualized basis is going to ring some alarm bells at the Bank.

Sunset Market Commentary

Investors positioned for a ‘hawkish pause’ over the previous days, with Fed Chair Powell/the governors’ summary of economic projections tomorrow seen cementing the higher for longer narrative while at the same time keeping the door open for a final rate hike in one of the two remaining meetings of the year.

Bank of England Decision Could Spell Bad News for Sterling

The United Kingdom economy seems to be losing steam, with recent data releases showcasing a severe slowdown in growth and a softer labor market. Economic growth was stagnant in July from a year earlier and business surveys warn the situation will get worse, putting the risk of a minor recession on the radar.

Dollar Wavers as Fed's Two-Day Policy Meeting Begins

Modest dollar weakness is emerging as the Fed begins their two-day policy meeting; the euro is back above the 1.07 level, while the loonie is advancing below the 200-day SMA, and as the British pound rises above the 1.24 level. Positioning into the FOMC meeting is seeing rate options traders increase hedges, which means some traders are worried that the expected mid-year pivot could be in jeopardy.

Canadian Dollar Shows Strength

The Canadian dollar reversed course to the upside a week and a half ago, and its strength is gaining momentum on the back of both a fresh wave of demand for commodities and robust economic data.

Swiss Franc Shines Bright, But Will SNB Clip Its Wings?

Even though it hasn't attracted many headlines, the Swiss franc has gone on a silent winning streak. It is virtually tied with the British pound as the top-performing currency of this year, while it has gained more than 3% against both the US dollar and the euro. Against the bruised Japanese yen, the franc has appreciated by around 15%, pushing the franc/yen cross to new record highs.

British Pound Pares Losses After Soft GDP

The British pound has edged lower on Wednesday. In the European session, GBP/USD is trading at 1.2472, down 0.17%. The pound fell as low as 1.2441 earlier today but has recovered some of those losses.