Markets:

  • Gold up $13 to $2663
  • US 10-year yields down 3.7 bps to 4.04%
  • WTI crude oil down $2.95 to $70.88
  • S&P 500 down 0.7%
  • JPY leads, AUD lags

The risk mood deteriorated in US trading and the dollar was generally stronger (though not as strong as the yen). Comments from Daly got some attention as she highlighted the potential for a pause this year seeing one or two further rate cuts this year. Given her dovish leanings, that's something of a surprise and helped along the US dollar.

The bigger driver was likely the stock market and chipmakers in particular. ASML's results were released early and led to a 17% decline in shares and 5% falls in the big chipmakers in part due to a softer guide for next year. The company emphasized that AI sales were unimpeded but with NVDA testing the June high yesterday, profit taking took over.

In addition, global growth trades pulled back on skepticism that China will deliver stimulus. The MCHI ETF fell 5% after Chinese stocks fell 3-4% yesterday, with China tech particularly soft.

The loonie is narrowly positive but is at risk of a 10th straight day of declines. The selling in the loonie accelerated after a low CPI print and CAD hit a two-month low but profit-taking on those moves hit soon afterwards to pull the Canadian currency back to square. Next week's BOC meeting will be an interesting one with the market now pricing in a 74% chance of a 50 bps cut.

It's starting to feel like the market is now fully tuned-in to the US election as a Trump interview with Bloomberg got attention and underscored his preference for tariffs if re-elected. Shares of DJT spiked and then plummeted if that's any indication of anything while Polymarket has Trump at a recent high at 58%.

FX news wrap Oct 15