EUR/GBP slides on Monday, trading around 0.8560 as the Euro (EUR) side of the cross is underpinned by a European Central Bank (ECB) that remains hawkish. The pair hit a two-week low of 0.8554 earlier in the day before the Pound (GBP) gained some ground.
The British Pound (GBP/USD) tested five-week lows of 1.3464 and trimmed some of its earlier losses on Monday, but it remains in the red, down 0.23% amid a light economic docket in the US and the UK as both countries' central banks get ready to release their monetary policy decisions on Wednesday and
EUR/CAD declines to around 1.6060 on Monday at the time of writing, down 0.17% on the day. The Canadian Dollar (CAD) benefits from the sharp rise in Oil prices, while the latest Canadian inflation data do little to alter the near-term monetary policy outlook.
The Dollar Index trades near 99.50, up 0.4% on the day, and it made the whole of that gain while America was asleep. A 5% Treasury yield sounds like the best thing that could happen to the Dollar, and New York has spent the morning selling it.
USD/JPY climbs on Monday as US Dollar (USD) demand picks up ahead of the Federal Reserve’s (Fed) interest rate decision on Wednesday.
The Dow Jones Industrial Average is down around 200 points and trades just under 52,400, and the reason is less exciting than the headlines. Those are about artificial intelligence (AI) and a sell-off in chip stocks, and that story belongs to the Nasdaq Composite, down about 1%.
Societe Generale economists Sam Cartwright and Michel Martinez analyze how renewed supply chain disruptions, including conflict in the Middle East, may affect Euro Area prices.
AUD/USD slipped to a new monthly low in the 0.7100s on Monday, driven by a firm run of United States (US) data that has pushed the market toward pricing in a Federal Reserve (Fed) rate hike at its meeting later this week.
Scotiabank strategists Shaun Osborne and Eric Theoret highlight a weaker Japanese Yen (JPY), down 0.7% versus the US Dollar (USD) and underperforming G10 peers alongside New Zealand Dollar (NZD) and Swedish Krona (SEK).
Pfister and Liebke analyse 30 years of FOMC meetings to separate interest rate surprises from forward guidance shocks and their effect on the US Dollar and G10 currencies.
TD Securities strategists Ryan McKay and Bart Melek note that CTAs remain maximally long WTI Crude, Brent Crude, diesel and gasoline as attacks on energy infrastructure in Saudi Arabia and Russia sustain a significant upside risk premium.
Scotiabank strategists Shaun Osborne and Eric Theoret report the Euro (EUR) is weaker, down about 0.5% versus the US Dollar (USD), as risk aversion supports broad USD strength. Yield spreads imply a fair value near 1.1633, while data have been light ahead of Tuesday’s ZEW survey.
Brown Brothers Harriman’s (BBH) Elias Haddad notes that recent Oil-driven market moves and sticky US Consumer Price Index (CPI) have strengthened expectations for a September Fed hike, but the futures curve already prices nearly 100 bps of tightening over twelve months.
The US 10-year Treasury yield has breached the 5% threshold on Monday for the first time since 2023, rising by more than four basis points as investors almost fully price in a 25-basis-point rate hike by the Federal Reserve (Fed) on Wednesday. At the time of writing, the US 10-year is at 5.006%
EUR/USD trades under pressure on Monday, with the Euro (EUR) losing around 0.55% against the US Dollar (USD). The Greenback strengthens across the board as traders position for a possible Federal Reserve (Fed) interest rate hike at the September 15-16 monetary policy meeting.
Royal Bank of Canada (RBC) economist Abbey Xu notes that Canadian inflation stayed at 3% year-over-year in August, with Food and energy components still elevated but easing somewhat.
ING economists James Knightley, Padhraic Garvey and Chris Turner now expect a 25bp Federal Reserve rate hike in September following Chair Kevin Warsh’s Jackson Hole remarks.
Scotiabank strategists Shaun Osborne and Eric Theoret note the British Pound (GBP) is softer against the Dollar but still outperforming most G10 currencies in a risk-off environment. Markets expect a hawkish hold from the Bank of England (BoE) on Thursday, with a possible 25 bp hike in November.
GBP/USD extends its decline on Monday and trades around 1.3470 at the time of writing, down 0.38% on the day. The pair falls to the lower end of its monthly range, weighed down by renewed demand for the US Dollar (USD) ahead of several major monetary policy decisions.
Commerzbank’s FX Research team, including Charlie Lay and Dr. Henry Hao, highlight that Brent crude has surged on Strait of Hormuz hostilities but see scope for gradual de-escalation in coming months.
DBS Group Research’s Philip Wee argues that the Euro has a subtle advantage over the Dollar this week, as the European Central Bank’s recent hikes and focus on inflation underscore its institutional credibility.
TD Securities’ Ryan McKay and Bart Melek highlight that CTAs (Commodity Trading Advisors) have turned large sellers of Gold, liquidating nearly half of their net-long exposure as markets price a Federal Reserve hike and higher energy costs.
USD/CAD edges higher for the fourth consecutive day on Monday as a stronger US Dollar (USD) outweighs support for the Canadian Dollar (CAD) from rising Oil prices. Traders show a muted reaction to the latest Canadian inflation figures.
Nomura’s Global Markets Research team, led by Josie Anderson, George Buckley and Andrzej Szczepaniak, notes that Sweden’s 13 September election remains too close to call, with the centre-left only narrowly ahead.
Commerzbank economists note that August US CPI data were broadly in line with expectations but still too high for the Federal Reserve. They stress excessive underlying price pressure and say the Fed has already signaled readiness to hike.
OCBC strategist Christopher Wong says oil risks have risen again as disruptions to Saudi export infrastructure and renewed concerns around the Strait of Hormuz and Bab el-Mandeb keep supply risks elevated.
Silver (XAG/USD) trades under pressure at the start of the week, with both the fundamental and technical backdrop pointing to further downside. At the time of writing, XAG/USD trades around $63, down roughly 2.40% on the day.
NZD/USD extends its decline on Monday, trading around 0.5770 at the time of writing, down 0.72% on the day.
Gold (XAU/USD) remains on the back foot on Monday as Federal Reserve (Fed) interest rate hike expectations dominate market sentiment ahead of the two-day monetary policy meeting starting on Tuesday.
Canada’s inflation held its pace in August, with the headline Consumer Price Index (CPI) rising 3.0% from a year earlier, matching market expectations and unchanged from the 3.0% increase recorded in July. On a monthly basis, prices declined by 0.1%.
Exclusive insights, trading signals, and real-time updates for registered users.