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Another quiet session ahead of the tomorrow mornings key FOMC meeting saw the Nasdaq close +.2%, the S&P 500 +.1%, and the Dow Jones unchanged. U.S. 10-year yields edged higher, while crude oil rose 1.7% to $71.30 a barrel. AUD/USD traded in a narrow 0.67415/.67685 range before settling at 0.6755/60 ahead of the Asian open. Into the London lunch and greenback found some support, the DXY trading back towards 100.70. The antipodes sat 10 points off 0.6769 and 0.6211 highs as EUR/USD and GBP/USD held steady. USD/JPY traded either side of 140.60 and US equities looked set to open 0.2% higher.
US Retail Sales for August were mixed, with the Headline beating estimates (+0.1%, est. -0.2%), Core missing (+0.2%, est. +0.3%) and the Control Group coming in line at 0.3%. The greenback caught a modest bid post print, USD/JPY popping 45 points to near 141.10, GBP/USD down to 1.32 from 1.3220, and the local unit off slightly to 0.6750 from 0.6765. US yields ticked higher, the 2 year yield up 4bps to 3.59% and the 10 year up 3 bps to 3.63%
Canadian CPI came in softer at -0.2% MoM (est. 0.0%) and 2% YoY (est. 2.1%). CAD sold off immediately post print, with USD/CAD up 30 points to new daily highs of 1.3617.Into the NY lunch and stocks began to falter, all three index’s back to near flat following the move higher in US treasury yields. Meanwhile Crude spiked higher following the attack in Lebanon, WTI up 1.7% to $71.30/barrel, whilst spot Gold was 0.4% lower to $2,570/ounce.
The dollar held onto its earlier session gains, with USD/JPY up near the daily high of 142.00, whilst GBP/USD made new lows of 1.3147. The antipodes were mixed at this point in the session- AUD/USD in the middle of its daily range of 0.6754, whilst NZD/USD was 15 points lower to 0.6184.Day AheadThe FOMC is widely expected to initiate a rate-cutting cycle with a 25 bps decrease at the coming meeting. With signs of softening in the job market, the communication is likely to guide towards further rate cuts ahead with the magnitude and cadence being data dependent.Additionally, the FOMC is set to update its Summary of Economic Projections, with its interest rate projections (“the dots”) likely to receive widespread attention.
U.S. Housing Starts and Building Permits for August will also be printed. The upcoming release will provide an update on the housing activity, likely indicating a reversal of the previous month’s release. July’s data showed a sharp decline, primarily in the multi-family segment, reflecting Hurricane Beryl’s impacts.
In Canada, the Bank of Canada Summary of Deliberations from the September meeting will be published. This could offer a deeper understanding of the decision to reduce rates earlier in the month. It might also shed light on the Governing Council’s perspective regarding the possibility of a 50-bps reduction ahead.
AUD/USD traded in a 0.67415/685 range. Offering interest is expected ahead of 0.6800, while demand remains in the 0.6600/25 region
Chart of the day
Mid-market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6762 |
| AUD/NZD | 1.0916 |
| AUD/JPY | 95.90 |
| AUD/CNH | 4.8056 |
| AUD/EUR | 0.6079 |
| AUD/GBP | 0.5136 |
| AUD/HKD | 5.2692 |
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