- GBP leads, NZD lags the day
- European equities down; S&P 500 futures down 0.4%
- US 10-year rates up 6.2 basis points to 3.549%
- Gold down 0.4% to $1,668.43
- WTI crude up 0.1% at $85.80
- Bitcoin down 1.7% to $19,200
The Fed’s push and pull continues as we see the dollar keep a firmer hand on the day as equities got off to a decently defeated start and bond yields continued to climb heading into the windfall from the central bank this week.
In terms of data, German producer prices recorded a record monthly and annual increase in August as rising cost pressures continue to intensify in Europe’s largest economy. That won’t bring much comfort, with July’s current account posting a major deficit – the largest since the global financial crisis more than a decade ago.
But trade sentiment continues to swirl around the countdown to tomorrow’s FOMC meeting, with the greenback firming slightly as EUR/USD fell from 1.0030 to 0.9995, while remaining near the parity with a slew of number-important option expiries in the coming days. .
USD/JPY held a slight lead around the 143.50-70 levels as bond yields continue to climb across the board. Meanwhile, the pound is somewhat stable, trading lightly around 1.1430 on the day.
As equities retreated from a bright start, commodity currencies are also being dragged lower, with USD/CAD rallying towards 1.3300 and AUD/USD hitting support again near 0.6700 . The kiwi bears the brunt of the declines, with NZD/USD slipping nearly 1% on the day now close to 0.5900.
All in all, it looks like the markets are still failing to find a clear path as we wait for the Fed’s decision tomorrow to really give traders and investors a lot more conviction for the second half of the week.