From Marc Chandler at Bannockburn Global Forex:
The combination of heightened expectations for the Federal Reserve to lift rates late this week coupled with the high oil prices have helped lift the US dollar broadly today. Yet, the PBOC set the dollar's reference rate at a new 3 1/2-year low today. Among the G10 currencies, the Swedish krona has been the hardest hit. It is off around 0.8% as the weekend election is too close to call and the late vote and ballots from overseas means the results may not be known for a couple more days. Meanwhile, President Trump says the war with Iran may end around the midterm elections. He also says that a trade deal with Canada may be struck “fairly soon”.
Often the market participants seem to be fascinated with trilemmas. We suggest one has unfolded. There cannot be the continued war in the Middle East, a cap on 10-year yields, and floor under the yen at the same time. Saudi oil production has plunged, and at the same time, China has reportedly re-entered the market and ostensibly is rebuilding inventories. The Trump administration calls on Ukraine to stop attacking Russian refinery capacity, which has been a factor driving up diesel prices, critical for long-haul trucking, freight trains, and farm equipment....
....MUCH MORE
