Forex today saw both US rates and the US dollar lower.
Markets are concerned about the fall-outs within Washington and the subsequent effect on Trump's fiscal agenda. This set the odds of a Dec rate hike back to YTD lows at 3-in-10. The recently Fed's Dudley inspired rally in the dollar has been curtailed and today's bearish wages reported published by the NY Fed has not helped the case for dollar bulls either. DXY is down -0.34% and US 10yr treasury yields slipped from 2.20% to 2.17%. The Fed fund futures yields price the chance of a December rate hike at around 40%.
On the geopolitical front, Trump announces plans to increase US military presence in Afghanistan contrary to his campaign pledge while the N.Korean situation took a temporary back seat. However, the yen remained firm, up 0.28% vs the greenback and testing the resilience of the weekly cloud base at 108.83 scoring a low at 108.63 but failing to sustain the move below said cloud base. The yen is, however, benefitting from continued concerns around the turnover of staff at the White House and subsequent hold ups around any potential legislative requirements on key fiscal issues.
The euro rallied on a heavy dollar as expectations increase around Draghi at the Jackson Hole this week, closing +0.42% on the day. Sterling was higher by +0.14% at 1.2896. USD/CHF was closing -0.30% and the commodity currencies closed slightly higher with AUD +0.09%, NZD +0.21% and CAD +0.17%. WTI drops with EIA showing that US crude production is at a two-year high. Metals are up, including gold by 0.42%.
Key events for Asia today
Trump is scheduled to outline the US strategy for Afghanistan in a TV address (Monday 9 PM ET).
Key notes from the US session
Trump to order approx 4,000 Army troops to Afghanistan - NPR
NY Fed: Individuals’ near-term outlook for the labor market deteriorates - Survey
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