From Marc to Market:
The combination of lower oil prices yesterday and less hawkish comments by NY Fed President Williams helped steady US interest rates yesterday. Williams, who has a permanent vote on the FOMC as its vice chair, open speaks as part of the Fed’s leadership, and downplayed the sense of urgency. The Fed funds were discounting about a 70% chance of a hike at the October FOMC meeting, a few days before the midterm election. The implied odds of a 25 bp cut are now nearer 40%.
The dollar is trading with a heavier bias today against nearly all the G10 currencies. A less than hawkish statement following yesterday hike by the Reserve Bank of Australia, and today’s slightly softer than expected August CPI has weighed on the Aussie today. Ahead of the week-long holiday beginning tomorrow in China, the PBOC unexpectedly set the dollar’s reference rate relatively sharply lower today (CNY6.7351), a new low since January 2023. New monetary and fiscal measures to support the economy have been unveiled over the last couple of days.....
....MUCH MORE
