Forexlive Americas FX news wrap 9 Oct: Dollar, yields and stocks move higher ahead of CPI | Forexlive

The RBNZ cut rates by 50 basis points and that sent the NZD lower vs all the major currencies. The largest decline was vs the USD with a decline of -1.32% The USD was the strongest of the major currencies today:

Tomorrow the US CPI data will be released with the expectation of 0.1% gains for the headline and 0.2% for the core. That data will be released at 8:30 AM tomorrow along with the weekly initial jobless claims.

Technically, the pair moved down to test the 61.8% target of the move up from the early August low at 0.60509.

The USDJPY continued its move higher ahead of the CPI data tomorrow and tests the high from August 16 at 149.356. That will also be a key barometer for buyers and sellers in the new trading day. Moving above will be more bullish with the 50% and the 100/200 day MAs as upside targets in the new trading day. . Staying below will keep the sellers in play with the 38.2% at 148.11 a target.

The USDCHF moved higher and is testing the high from last Friday after stalling near the high of the Red Box on the correction lower yesterday. A move above the high from last week at 0.8607 would next target the 38.2% of the move down from the July high at 0.86312. Getting and staying above that level is needed to show the buyers are serious about moving this pair higher after trending lower.

Fundamentally, the Fed meeting minutes from the September meeting where the Fed cut rates by 50 basis points said:

The Fed minutes revealed that a “substantial majority” supported a 50 basis point rate cut, with “almost all” participants agreeing that inflation risks have diminished, while downside risks to employment have increased. Although some members preferred a smaller 25 basis point cut due to ongoing inflation concerns and solid economic growth, the committee gained confidence that inflation is moving towards the 2% target. Employment and inflation risks are now seen as roughly balanced, with the economy expanding at a solid pace and unemployment remaining low. The committee indicated it would carefully assess future data before making additional rate adjustments, anticipating a gradual move toward a neutral policy stance.

Earlier today Dallas Fed President Lorie Logan said:

Dallas Fed President Logan indicated that a “more gradual” approach to rate cuts is likely appropriate moving forward, given the upside risks to inflation. She expressed concern that inflation could remain above the Fed’s target and emphasized the importance of not rushing to reduce rates. A gradual reduction in rates would provide the Fed more time to assess how restrictive current policy is and help balance labor market risks without overly cooling it. Logan acknowledged that progress on inflation has been broad-based and that the labor market has cooled but remains healthy. However, she warned that stronger-than-expected economic growth and spending could increase inflationary pressures. Despite her hawkish stance, Logan is not advocating for a pause in rate cuts.

In the US stock market today, the major indices closed higher with both the Dow and the S&P closing at record levels:

Dow industrial average rose 431.63 points or 1.03% at 42512.00
S&P index rose 40.91 points or 0.71% at 5792.04
NASDAQ index rose 108.70 points or 0.60% at 18291.62

The small-cap Russell 2000 rose 5.601 points or 0.26% at 2200.58

IN the US debt market, yields are closing near the highs with the 2 year yield back above 4.000%:

2-year yield 4.023%, +4.5 bps
5-year yield 3.918%, +5.3 bps
10 year yield 4.075%, +4.0 bps
30 year yield 4.343%, +1.9 bps

The US treasury auctioned off 10 year note with mixed results. The domestic demand was low but the international demand was very strong. There was a positive tail which brought the grade for the auction down toward a C+

Oil inventories surged but the build was lower than the private data. The gains may be due to the Hurricane perhaps? Just guessing but they were not close to expectations.