The JPY is the strongest and the AUD is the weakest as the NA session begins | Forexlive

As the North American session begins, the JPY is the strongest and the AUD is the weakest. The USD is stronger as traders return from the Labor Day holiday. It is full steam ahead now to the US presidential debate on September 10 (assuming solving the mic issue), which will culminate in the Presidential Election Day 62 days and 19 hours from today.

Geopolitical risks remain high.

US stocks are lower to start the shortened trading week. The Wall Street Journal reported that “Americans are really, really bullish on stocks”.

• Americans are heavily investing in stocks as major indexes reach new highs; S&P 500 up 18% this year.
• Number of $1 million+ 401(k) accounts at Fidelity reached 497,000, a 31% increase from last year and a record high.
• U.S. households’ stock allocations reached around 42% of total financial assets, the highest since 1952.
• S&P 500 has hit over three dozen records this year, on pace for the most in a calendar year since 2021.
• Investor sentiment is high; bullish sentiment near its highest levels of the past year.
• U.S. equity funds saw inflows for eight consecutive weeks through late August; small-cap funds particularly strong.

And down goes stocks today.

In Europe today:

Switzerland Economic Data:

• Swiss CPI eased to 1.1% year-on-year in August (expected: 1.2%, previous: 1.3%). The MoM came in at 0.0% vs 0.1% estimate (was -0.2% last month).
• Inflation is well below the Swiss National Bank’s (SNB) Q3 forecast of 1.5%.
• Analysts suggest that this data might increase the SNB’s confidence in inflation control.
• The low inflation rate could lead to the SNB allowing the Swiss franc (CHF) to weaken.
• GDP QoQ Q2 came in at 0.7% vs 0.5% estimate. YoY came in at 1.8% vs 1.4% estimate (0.6% last quarter)

Justin posted earlier the implications for the SNB. In summary:

Last week, SNB Chairman Thomas Jordan remarked that the strong Swiss franc is not making things easier for the Swiss economy, hinting that the central bank may be closely monitoring the situation and considering its next move regarding the currency’s direction. Previously, when the SNB was hiking rates, a stronger franc was necessary to counteract imported inflation and prevent it from spiraling out of control, a strategy that successfully kept inflation in check. However, recent lower inflation data indicates that imported inflation is no longer an issue for the SNB; rather, the strong franc is now contributing negatively to price pressures. In the latest report, services inflation was at 2.2%, but the headline inflation rate was just 1.1%, with core inflation at 1.3%. With imported inflation decreasing due to the strong franc—evidenced by the EUR/CHF exchange rate touching a record low in August—the SNB might consider intervening in the market again. While they have various tools at their disposal, adjusting monetary policy settings could be more effective. A 50 basis points rate cut to weaken the franc is certainly under consideration, especially as markets have yet to fully price in such a move.

The CHF is stronger despite the fall in inflation today with a gain of 0.29% vs the EUR. It is near unchanged vs the USD.EURCHF is down testing the 50% of the August move higher and the flat 100 hour MA. Both are near 0.9394.