Wednesday, September 13, 2023

Capital Markets: "Heightened Speculation of an ECB Hike Tomorrow Fails to Lend the Euro Support"

From Marc Chandler at Bannockburn Global Forex, September 13:

Overview: The US dollar is trading with a firmer bias against all the G10 currencies ahead today's August US CPI report. Even increased speculation that the ECB will hike rates tomorrow has failed to lift the euro, while a larger than expected contraction in the UK's July GDP pushed sterling briefly through last week's lows. The dollar rose to a marginal new high for the week against the Japanese yen, as the market seemed uninspired by the cabinet reshuffle, but is wary of intervention. Most emerging market currencies are a bit heavier, but not the Chinese yuan, which has stabilized amid a continued liquidity squeeze in Hong Kong.

Equities and bonds are heavier. All the large markets in the Asia Pacific region fell today, with Taiwan and India the notable exceptions. Europe's Stoxx 600 is off nearly 0.60%, which, if sustained would be the largest decline since mid-August. US index futures are slightly softer. European benchmark 10-year yields are 3-5 bp higher, though Gilts are outperforming after the GDP figures. The 10-year US Treasury yield is up two basis points to 4.30%. A stronger dollar and firmer rates have weighed on gold. Monday's high was near $1931, and yesterday's low was closer to a little above $1907. It is consolidating in a narrow range above that low, which is nearly a three-week low. October WTI remains bid. It gains have been extended to about $89.65 today. It settled last month near $83.65.

Asia Pacific
China's economic calendar is busy ahead of the weekend....