Fed's Signals Will Guide Markets Through September

The Fed is widely expected to raise its benchmark interest rates by 25-basis points today; anything else would be a shocker.

Aussie Slips as Inflation Falls, Fed Expected to Hike

The Australian dollar is in negative territory on Wednesday. In the European session, AUD/USD is trading at 0.6758, down 0.49%. The Aussie fell as much as 0.90% earlier in the day but has recovered some of these losses.

Japanese Yen Extends Gains, Fed Rate Decision Looms

The Japanese yen is showing some strength this week and has gained 1.1%, rebounding from the previous week’s plunge of 2.2%. In Wednesday’s European session, USD/JPY is trading at 140.23, down 0.49%.

Better to Wait the Outcome of Next Week's ECB/Fed Policy Meetings

We don’t expect retail sales to have a big market impact following final pre-Summer lull 2-way positioning at the start of the month. Traded volumes are shrinking fast and risk-reward it’s better to wait the outcome of next week’s ECB/Fed policy meetings.

Bitcoin Risks Falling Out of Range

In contrast to the positive performance of stock indices, which updated multi-month highs, the first cryptocurrency rolled back below 30k on Monday. Early attempts to raise the price have been unsuccessful, leaving Bitcoin near the lower end of its four-week trading range. A failure of current support at $29.8K opens the door to a deeper correction at $28.6-28.8K, the 50-day moving average and 61.8% of the rally from the late June lows.

US Retail Sales Disappoint, RBA Undecided on Future Moves

Stock markets are marginally negative on Tuesday, with US retail sales data weighing slightly after initial volatility passed.

Sunset Market Commentary

Comments from ECB’s Knot were responsible. The Dutch central bank governor is known as an outspoken hawk but in an interview with news agency Bloomberg today he struck an unusual neutral-to-dovish tone. Knot said that core inflation looks like it has plateaued.

NZ First Impressions Consumers Price Index June Quarter 2023

Consumer prices rose 1.1% in the June quarter and are up 6.0% over the past year. The result was close to our own forecast and the RBNZ expectations. The underlying details were firm.

CPI Not Enough for RBNZ to Change Wait-and-See Stance

Today’s data probably won’t be enough for the RBNZ to openly change its wait-and-see stance after announcing the end of the rate hike cycle in May (5.5%). The kiwi dollar gained temporary after the release but already more than reversed those gains to currently trade near NZD/USD 62.6.

Softer-than-Expected UK Inflation Sends Cable Below 1.30

Cable slipped below 1.30 as a kneejerk reaction as softer inflation tempered Bank of England (BoE) hawks. But even with a softer-than-expected figure, inflation in Britain remains high and stickier than in other Western economies, and that keeps odds for further BoE action sensibly more hawkish than for other major central banks.