The EUR is the strongest and the CAD is the weakest as the NA session begins | Forexlive

As the North American session begins, the EUR is the strongest and the CAD is the weakest. THe USD is mixed but tilted to the upside. The

The U.S. House of Representatives will review four spending bills proposed by conservatives for the next fiscal year. These bills are not likely to be passed into law paving the way to a government shutdown by October 1. House Speaker Kevin McCarthy is promoting these bills, which limit abortion access and reduce climate initiative funding, to gain support from the far-right GOP members for a temporary funding bill to prevent the shutdown. However, many Republicans are hesitant due to a previous spending agreement between McCarthy and President Biden. Moody’s, a credit rating agency, cautioned that a shutdown could highlight the frailty of U.S. governance compared to other top-rated nations. Recall, on August 1st, Fitch Ratings unexpectedly lowered the U.S. Treasuries’ credit rating from AAA to AA+. The downgrade was due to anticipated fiscal decline in the coming three years, an increasing government debt, and “weakened governance compared to AA and AAA rated counterparts”. Moody’s still has a AAA rating on US debt. The S&P rating is AA+.

Meanwhile, today President Biden is visiting Michigan to express support for the United Auto Workers union’s strike against Detroit car manufacturers. Despite Ford improving its offer, significant differences remain. While Ford, General Motors, and Stellantis have suggested pay increases, the union highlights unresolved issues like pension benefits and working conditions. The UAW strike, is starting day 11 and has led to strike stoppages at 38 parts and distribution plants. As Biden gears up for re-election, he hasn’t received an official endorsement from the UAW but has urged car companies to share more profits with union members. Not to be outdone, ex-president Donald Trump will host a rally for auto workers, aiming to win back blue-collar voter support for his 2024 campaign.

Overnight, Minneapolis Fed president Neil Kashkari said that the Federal Reserve believes:

• There’s more work needed regarding services inflation.
• The Fed is confident in achieving a 2% inflation rate.
• If real rates tighten, there might be a need to reduce rates.
• To stabilize the economy, US rates might need to increase and be maintained for an extended period.
• A decrease in inflation next year could lead to a reduction in the federal funds rate.
• He is one of the FOMC policymakers anticipates another rate hike this year.
• In the event of a government shutdown, the usual data might be inaccessible, but they will rely on the best private data available.
• Decisions will be made based on the best available data. An un-inverting yield curve could be a positive sign.

Japan’s Finance Minister Suzuki made comments regarding the Japanese Yen (JPY), emphasizing that currency rates should be determined by the market. He expressed concerns about rapid foreign exchange (FX) movements, stating that they are undesirable. Suzuki is closely monitoring FX movements with a heightened sense of urgency. He also mentioned that they would not exclude any measures to address disorderly FX movements. Furthermore, he shared a consensus with international authorities that excessive FX volatility is not favorable. The USDJPY moved to the highest level since October 2022 at 149.79

On the economic and event calendar today:

• 9:00am:
  • S&P/CS Composite-20 HPI y/y: Actual data not provided, Forecast: 0.0%, Previous: -1.2%
  • HPI m/m: Forecast: 0.4%, Previous: 0.3%
• 10:00am:
  • CB Consumer Confidence: Forecast: 105.5, Previous: 106.1.
  • New Home Sales: Forecast: 699K, Previous: 714K.
  • Richmond Manufacturing Index: Forecast: -6, Previous: -7.
• 1:30pm:
  • FOMC Member Bowman Speaks

US stocks features are implying a lower opening after gains to start the trading week yesterday. Yields are taking a breather to the downside today after rising sharply yesterday especially further out the curve.

A snapshot of the markets as the NA session gets underway shows:

• Crude oil is trading down $0.76 or -0.86% at $88.91 There is increased concerns about potential reduced fuel demand. This comes after major central banks, including the U.S. Federal Reserve and European Central Bank, indicated they might maintain higher interest rates for an extended period to address inflation. Prolonged high rates could slow economic activity, subsequently affecting oil demand. The government shutdown is not helping either. Additionally, in China Evergrande’s recent financial troubles have raised concerns about economic growth, impacting its oil imports. In contrast, these demand worries are somewhat balanced by limited supplies, as Russia and Saudi Arabia have prolonged their output cuts until 2023’s end.
• Spot gold is trading down $4.19 or -0.22% at $1911.60
• Spot silver is trading down $0.13 or -0.58% at $22.99
• Bitcoin is trading at $26,265. At this time on Monday, the price bitcoin was trading at $26,083.

In the US premarket for US stocks, futures are implying that the major indices will open lower after all 3 major indices closed higher to start the trading week on Monday.

• Dow Industrial Average futures are implying a decline of -103 point after Friday’s gain of 43.04 points
• S&P index futures are implying a loss of -14.19 points after yesterday’s 17.40 point rise
• NASDAQ futures are implying a loss of -45 points after yesterday’s 59.51 point rise

In the European equity markets, the major indices trading mostly lower:

• German DAX, -0.61%
• France’s CAC, -0.67%
• UK’s FTSE 100, +0.17%
• Spain’s Ibex, -0.07%
• Italy’s FTSE MIB, negative 0 point 79% (10 minute delay)

In the Asian Pacific today, equity markets closed mixed

• Japan’s Nikkei 225, -1.11%
• China’s Shanghai Composite, -0.43%
• Hong Kong’s Hang Seng, -1.48%
• Australia’s S&P/ASX 200, -0.54%

In the US debt market, yields are lower with the yield curve flattening

• 2-year yield, 5.127% -0.4 basis points
• 5-year yield, 4.590% -2.9 basis points
• 10-year yield, 4.502% -3.9 basis points
• 30-year yield, 4.66% -3.3 basis points
• 2 – 10 year spread is back down to -62.8 basis points (down 3.6 basis points), while the 2 – 30 year spread is down to -50.4 basis points (down 2.9 basis points)

In the European debt market, benchmark 10-year yields are trading mostly lower:

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