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America Roundup: US Dollar Rises as Markets Brace for Big Fed Rate Hike, Wall Street Ends Choppy Session Higher, Gold Falls, Oil Rises Slightly as Markets supply issues outweigh demand and rate hike concerns – September 20, 2022

Market overview

• All eyes are on the Fed’s policy decision on Wednesday

• Prices of traders with a low probability of a rate hike of 100 bps

• 10-year US Treasury yields at their highest since 2011

• US indices up: Dow 0.64%, S&P 0.69%, Nasdaq 0.76%

•Canada August IPPI (Annual) 10.6%, previous 11.9%

• Canadian August PMPI (monthly) -4.2%, forecast 3.2%, previous -7.4%

• Canadian IPPI in August (monthly) -1.2%, forecast 0.2%, previous -2.1%

• Canadian PMPI in August (annual) 17.6%, previous 19.1%

• French BTF auction 12 months 1.798%, previous 1.450%

• French 3-month BTF auction 0.686%, previous 0.648%

• French 6-month BTF auction 0.890%, previous 0.747%

• US Sep NAHB Housing Market Index 46, 47 forecast, 49 previous

• US 3-month bill auction 3.270%, previous 3.075%

• US 6 month bill auction 3.780%, previous 3.465%

Future Outlook – Economic Data (GMT)

• 23:30 Japan Aug CPI, nos (monthly) 0.5% previous

• 23:30 Japan August National Core CPI (YoY) 2.7% forecast, 2.4% previous

• 23:30 Japan Aug National CPI (annual) 2.6% previous

•01:15 China PBoC Loan Prime Rate 3.65% forecast, 3.65% previous

Future Outlook – Events, Other Releases (GMT)

• 01:30 Australia RBA Meeting Minutes

Currency summaries


EUR/USD: The euro was little changed against the dollar on Monday ahead of a series of central bank meetings this week led by the Federal Reserve, which is expected to raise interest rates another 75 basis points (bps). Fed funds futures priced an 81% chance of a 75 basis point rate hike this week and a 19% chance of a 100 rise by the end of the two-day policy meeting. of the US central bank. The dollar index, which measures the currency against six peers, rose 0.1% to 109.62, not far from the 20-year high of 110.79 hit on September 7. The euro was little changed against the dollar at $1.0025. Immediate resistance can be seen at 1.0046 (30DMA), a break up can trigger a rise towards 1.0094 (38.2% fib). On the downside, immediate support is seen at 0.9956 (23.6% fib), a break below could take the pair towards 0.9902. (lower BB).

GBP/USD: The pound rose slightly against a strong dollar on Monday as the dollar gave up some gains ahead of a much-anticipated monetary policy decision by the US Federal Reserve and several other central banks this week. Currency trading was generally subdued, with London markets closed for the Queen’s funeral. With the Bank of England expected to hike rates by at least 50 basis points (bps) this week, the prospect of further tightening failed to support the pound. The Federal Reserve is also meeting this week and expectations of an even bigger hike of at least 75 basis points have supported the dollar. The British Pound was up 0.08% against the Dollar at 1.1438, immediate resistance can be seen at 1.1462 (5DMA), a break up can trigger a rise towards 1.1501 (38.2% fib ). On the downside, immediate support is seen at 1.1364 (23.6% fib), a break below could take the pair towards 1.1283 (BB lower).

USD/CAD: The Canadian dollar was little changed against the greenback on Monday, recouping its earlier decline, as investors adjusted bets on the extent of the Federal Reserve’s interest rate hike this week and awaited national inflation data. Money markets fully priced the likelihood of the Fed making a 75 basis point hike after the end of a two-day policy meeting on Wednesday, and about a 20% chance of an even bigger 100 basis point move. base. Canadian inflation data for August, due Tuesday, could help guide expectations of further tightening from the Bank of Canada. The Canadian dollar was trading almost unchanged at 1.3260 per US dollar, after touching its lowest intraday level since November 2020 at 1.3344. Immediate resistance can be seen at 1.3303 (BB upper), a break up can trigger a rise towards 1.3358 (23.6% fib). On the downside, immediate support is seen at 1.3182 (50% fib), a break below could take the pair towards 1.3159(9DMA).

USD/JPY: The dollar was little changed against the Japanese yen on Monday as investors braced for a busy week of central bank meetings that will see borrowing costs rise globally, with the possibility of rise in size in the United States. Markets are fully priced for a 75 basis point interest rate hike from the Federal Reserve, with futures showing a 20% chance of a full percentage point. They also indicate a real chance that rates could hit 4.5% as the Fed is forced to tip the economy into recession to get inflation under control. The dollar last traded at 143.20 yen, having retreated from the recent 24-year high of 144.99 amid increasingly strident warnings of intervention from Japanese policymakers. A strong resistance can be seen at 143.44 (5DMA), a break up can trigger a rise towards 144.77 (23.6% fib). On the downside, immediate support is seen at 142.01 (38.2% fib), a break below could take the pair towards 140.96 (21DMA).

Summary of actions

European markets staged a mid-afternoon rally on Monday, but still ended the session lower.

Britain’s benchmark FTSE 100 closed down 0.62%, Germany’s Dax ended up 0.49%, France’s CAC ended the day down 0.26%.

Wall Street’s major indexes ended a seesaw to the upside on Monday as investors turned their attention to this week’s policy meeting at the Federal Reserve and how aggressively it will raise interest rates. ‘interest.

The Dow Jones closed up 0.64%, the S&P 500 closed up 0.69%, the Nasdaq stabilized 0.76%.

Summary of treasury bills

Benchmark 10-year U.S. Treasury yields hit their highest level in more than 11 years on Monday, as investors braced for the Federal Reserve’s policy decision on Wednesday, which is expected to make another big hike in interest rate.

The 10-year yield, the world’s largest interest rate benchmark, rose six basis points to 3.508%, the highest since April 2011.

Summary of raw materials

Gold prices weakened on Monday, heading back towards a 29-month low hit on Friday, as dollar and Treasury yields firmed on expectations that the US Federal Reserve will carry out a sharp hike in interest rates. interest at its meeting this week.

Spot gold was down 0.3% at $1,670.72 an ounce at 1:48 p.m. ET (1748 GMT), holding above its lowest level since April 2020 on Friday. US gold futures were down 0.3% at $1,678.20.

Prices edged higher on Monday in volatile trading as fears of tighter supply outweigh fears of slowing global demand due to a strong U.S. dollar and possible sharp increases in prices. interest rate.

Brent crude for November rose 65 cents, or 0.7%, to $92 a barrel, while U.S. West Texas Intermediate (WTI) for October rose 62 cents to $85.73 a barrel, or 0 .7% percent.