USD firmer versus core majors – Scotiabank

FXStreet Insights Team FXStreet

The US Dollar (USD) is mixed overall on the day so far but the DXY is slightly firmer as dollar gains are concentrated mainly among the core majors, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD softer against commodity FX

"High beta/ commodity FX is generally outperforming, however, reflecting a 5% jump in crude oil prices and a generally firmer commodity complex, which includes a mild rebound in gold after support around $4000 held losses earlier this week. High energy prices are a terms of trade negative for the JPY, which is one of the main underperformers on the day. Oil gains reflect a kneejerk reaction to news yesterday afternoon that the US would sanction Russia’s largest energy producers."

"The EU also imposed new sanctions on Russia’s energy infrastructure. Global stocks are little changed, with many indices holding close to record highs. Bonds have sold off, with Treasurys underperforming and driving the 10Y yield back to near 4%. Volatility has picked up a little in response to evolving geo-political risks. Aside from Russian sanctions, the US is considering curbs on software exports to China, reports yesterday indicated. Tech stocks responded negatively to that news."

"A WSJ report that the US is in talks about taking equity stakes in quantum computing companies in return for federal funding may help lift the mood, however. We do get a smidge of US data today—from the KC Fed’s manufacturing survey—but markets are focused a bit more intently on tomorrow’s US September CPI report. A 25bps cut in the Fed Funds target rate is fully priced in and the inflation data seems unlikely to deter market expectations significantly. Still, the DXY remains on track to retest the mid-99 area in the near-term and may extend gains into November before a consolidation or correction develops."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD consolidates above 0.7200 as bulls await US CPI for Fed rate cues

AUD/USD is seen extending its consolidative price action above 0.7200 during the Asian session on Wednesday as traders await the release of US inflation figures later in the week. Meanwhile, rising RBA rate-hike bets act as a tailwind for the Aussie amid Yen-inspired US Dollar weakness. However, escalating US-Iran tensions and hawkish Fed expectations limit USD losses, capping the currency pair.

USD/JPY hangs near multi-month low, above 153.00 amid BoJ hike bets

USD/JPY attracts fresh sellers during the Asian session on Wednesday as the strong Reuters Tankan business survey adds to the case for continued BoJ policy normalisation and boosts the Japanese Yen. This, along with a broadly weaker US Dollar, keeps spot prices close to a nearly seven-month low set on Tuesday. However, geopolitical risks and Fed rate hike bets could support the USD and the currency pair ahead of the release of US inflation figures later this week.

Gold weakens below $4,350, hitting a one-week low on hawkish Fed bets

Gold trades with a negative bias for the fourth straight day and drops to a one-week low, below $4,350 during the Asian session on Wednesday. Expectations of a Fed rate hike this month weigh on the non-yielding bullion. The US Dollar, however, struggles to lure buyers amid a rallying Yen and could support the commodity as traders await the key US inflation data for a fresh impetus.

Bitcoin remains highly sensitive to macro signals amid changing derivatives narrative

Bitcoin’s (BTC) sensitivity to US economic data has become increasingly evident this year. As the market approaches several important data dumps this week, BTC traders are keenly aware of the significance just like their counterparts in TradFi. And just like the stock market, crypto traders are focused squarely on the US central bank's interest rate policy.

Gold and stocks: What eight midterm elections did

I went back through every midterm election since 1994 and asked one question of each: when did the stock market make its low for the year, before the vote or after it? In seven of the eight cycles, the low came before the election. In six of the eight, it came between mid-June and mid-October, which is to say in the exact window that the "they won't let it fall" argument says is protected.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.