Spreadex Market Update
Market Uncertainty as Investors Await Key Data
The financial markets remain on tenterhooks as investors grapple with a slew of critical data releases, global yield shifts, and central bank whispers. Amidst this turbulence, the US dollar manages to maintain its steady performance.
Key Factors for Today
- Markets Nervous as Data Deluge Approaches
- Gold Holds Steady Despite Fed Hike Speculation
- Yen Surges as BOJ Hints at Easing Policy Shift
- German Inflation Data Dampens Expectations of ECB Rate Hike
- Canadian Dollar Boosted as Unemployment Numbers Surprise
Market Movers
- Investors adjust their expectations of a November rate hike, causing the US yield curve to flatten.
- Despite spiking briefly, gold remains close to Friday's peak, with potential risks on the horizon.
- BOJ's comments and rising JGB yields push the USD/JPY pair towards 146.
- Lower-than-expected German CPI data reduces the likelihood of an ECB rate hike.
- Strong employment figures help the Canadian dollar break through resistance levels.
Economic Calendar
- IT Industrial Production
- BOE Pill Speech
- BOE Mann Speech
- Westpac Consumer Confidence Change
- NAB Business Confidence
- New Yuan Loans
The Big News
US Yield Curve Flattens as Rate Hike Expectations Soar
In the United States, the yield curve has undergone a noticeable flattening as investors adjust their expectations. The chances of a rate hike in November have risen to 47%, up from 35% just last week. This shift is sending ripples through various asset classes, including gold, which briefly spiked to $1930 an ounce before settling below $1920. A looming strike by the UAW at automakers could further dampen risk appetite and bring $1935.oz into focus.
Japanese Yen Surges as BOJ Hints at Policy Shift
The Japanese Yen has experienced a sudden surge in value. BOJ Governor Kazuo Ueda's remarks over the weekend hinting at the potential end of ultra-easing policy by year-end have had a significant impact. The yield on the 10-year JGB jumped by 5 basis points, reaching its highest level since 2014. The USD/JPY pair is edging closer to 146, with 147 as a formidable resistance level.
German Inflation Data Weighs on ECB Rate Hike Expectations
In Europe, German inflation data has confirmed a rate of 6.1% for August, down from 6.2% in July. This has led to market participants pricing in a 35% chance of an ECB rate hike at the upcoming meeting. The EUR/USD pair, which had a mixed performance on Friday, is showing signs of strength early this week, potentially aiming for $1.0766, with $1.0686 providing expected support.
Canadian Employment Data Surprises: Loonie Strengthens
Canada has delivered a positive surprise in its employment data. The net change in employment nearly doubled forecasts, coming in at 39.9K compared to the expected 20K. Additionally, the unemployment rate dropped to 5.5%, below the forecasted 5.6%. These robust numbers have bolstered the Canadian dollar, pushing it past resistance at $1.3685, and it's now hovering around the $1.36 mark.
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