> AU September NAB Business Confidence : 13 v. -6 revised prev.
> US August JOLTS Job Openings : 10.44Mio v. 10.95Mio exp.
> US FOMC Members Clarida and Bostic to speak – “There is a flavour of stagflation right now” ; “The FED is going to be comfortable with a bit more volatility in inflation”
Overnight Headlines (BBG)
> Comments from FOMC members Clarida and Bostic added to the narrative taking over markets that the Federal Reserve will embark on their tapering of policy in the coming months as inflation pressures mount
What you need to know
Markets are starting to re-calibrate their expectations around inflation, with all eyes on their evening’s consumer inflation print from the US as commodity prices and widespread inflation pressures continue to push higher. Business confidence figures in Australia have started to rebound, as the reopening of NSW amidst a drop in COVID cases and high vaccination rates see investors support the AUD as a strong Q4 becomes even more likely. The AUDUSD touched yet another fresh high below the 0.7400 handle, with 0.7385 the peak before settling back in around the 0.7350 mark ahead of this evening’s CPI print and today’s China numbers.
EURUSD continues to struggle mightily, as central bank policy tightening is starting to peek into the story the lagging tapering plan from the ECB has put downward pressure on the currency and hanging on above the 1.1500 level. Comments from Fed members around the persistent inflation that is being seen across markets added even more fuel to the likely tightening from the Fed, as they seem to be acknowledging that the transitory nature of the price increases is decreasing.
The Dollar is regaining some of its momentum, up 0.2% on the DXY and looking poised to break through key levels on the topside. UST yields seeing some movement on the shorter end, with the 2y spiking on the inflation angst. Commodity markets mixed on the day, having a whippy session as the volatility increases Iron Ore was unable to hold gains and down 2% while Copper lagged down 0.8%. WTI crude continues to be the one to watch, holding firm above US$80barrel levels as shortages keep the price elevated.
The Day Ahead
> AU October Westpac Consumer Sentiment : 2.0% prev.
> NZ October Prelim ANZ Consumer Confidence : -7.2% prev.
> CN September Trade Balance (USD) : 46.5Bio exp.
> US September Core CPI & H/Line CPI : 0.3% & 0.2% exp.
> US FOMC Meeting Minutes
Expecting today’s WBC consumer sentiment figures to show the rebound as the reopening of NSW buoys sentiment. Chinese trade figures around mid-day will give markets something to digest ahead of what is a pivotal overnight session for the USD and markets as a whole. Consumer inflation for September hits the wires first up tonight, with upside prints making is very difficult for the Fed not to taper in November. While, the FOMC meeting minutes may provide more insights into the thought process of policymakers as they debate the transitory nature of these price increases. Wide range reflects the important data session ahead.
Range Today : 0.7325 – 0.7410
The continued move higher and higher highs shows the momentum turning bullish ahead of the key 24 hour session. A break of the overnight high of 0.7385 in today’s session would bring the 100DMA at 0.7423 into play. The pair has had little to show above the 0.7400 handle, so expect to see some selling pressure on a break although momentum has clearly rebounded. 0.7326 is the target on moves lower, with 0.7290 needing to be broken to see a drift back toward 0.7226.
“Cambridge Global Payments” is a trade name, which in this document refers specifically to one or more of these legal entities: Cambridge Mercantile Corp., Cambridge Mercantile Corp. (U.S.A.), Cambridge Mercantile Corp. (Nevada), Cambridge Mercantile (Australia) Pty. Ltd.
Cambridge Global Payments (“Cambridge”) provides this document as general market information subject to: Cambridge’s copyright, and all contract terms in place, if any, between you and the Cambridge entity you have contracted with. This document is based on sources Cambridge considers reliable, but without independent verification. Cambridge makes no guarantee of its accuracy or completeness. Cambridge is not responsible for any errors in or related to the document, or for damages arising out of any person’s reliance upon this information. All charts or graphs are from publicly available sources or proprietary data. The information in this document is subject to sudden change without notice.
Cambridge may sell to you and/or buy from you foreign exchange instruments (including spot and/or derivative transactions; both kinds are here called “FXI”s) covered by Cambridge on a principal basis.
This document is NOT: 1) Advice of any kind, or 2) Approved or reviewed by any regulatory authority, or 3) An offer to sell or a solicitation of an offer to buy any FXIs, or to participate in any trading strategy.
Before acting on this document, you must consider the appropriateness of the information, based on your objectives, needs and finances. For advice, you must contact someone independent of Cambridge.
Certain FXIs mentioned in this document may be ineligible for sale in some locations, and/or unsuitable for you. Contact your Cambridge representative for further information regarding product availability/suitability before you enter into any FXI contract.
FXIs are volatile and may cause losses. Past performance of a FXI product cannot be relied on to determine future performance.
This document is intended only for persons in Canada, the US, and Australia. This document is not intended for persons in the UK or elsewhere in the EEA. In Australia, this publication has been distributed by Cambridge Mercantile (Australia) Pty. Ltd. (ABN 85 126 642 448, AFSL 351278); for the general information of its customers (as defined in the Corporations Act 2001). This entity makes no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law.
Fees may be earned by Cambridge (and its agents) in respect of any business transacted with Cambridge.
The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact the applicable Cambridge if you wish to use Cambridge services to enter a transaction involving any instrument mentioned in this document.
© Copyright 2018, Cambridge Mercantile Corp., ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Cambridge Mercantile Corp. See www.cambridgefx.com for contact details.