- US August retail sales control group +0.3% versus +0.3% expected
- Canada August CPI 2.0% vs 2.1% expected
- US September NAHB home builder sentiment 41 vs 40 expected
- US July business inventories 0.4% versus 0.3% expected
- US August industrial production +0.8% vs +0.2% expected
- US treasury auctions off $13 billion of 20 year bonds at a high yield of 4.039%
- Canada August housing starts 217.4K vs 252.5K expected
- ECB's Villeroy: French goal to cut deficit to 3% of GDP by 2027 is not realistic
- WSJ: JPMorgan in talks with Apple for credit card business
- Goldman Sachs raises its estimate for Q3 growth to 2.8%
- Atlanta Fed Q3 GDPNow 3.0% vs 2.5% prior
- Lebanese says about 2,800 injured, including 200 in critical condition, in pager bombings
- Israel preparing for a war with Hezbollah
- New Zealand GDT price index +0.8%
- Timiraos: Fed faces a finely-balanced choice over whether to cut
- FOMC preview: Why the dot plot isn't helping anyone
Markets:
- Gold down $14 to $2568
- US 10-year yields up 2.6 bps to 3.65%
- WTI crude up $1.26 to $71.37
- S&P 500 up 0.1% in 7th straight day of gains
- AUD and USD lead, JPY lags
The US dollar was modestly bid on most fronts on Tuesday as we near the FOMC decision. The catalyst was a slightly stronger retail sales report that further clouds the 50 vs 25 basis point debate. Pricing is at 65% for 50 bps, which was stable today but yields rose and so did the dollar.
The euro fell to 1.1120 from 1.1140 while the pound fell to 1.3160 from 1.3200. The antipodeans also lost ground but some of that was compounded by a retracement in stock markets. S&P 500 futures had been higher but the index ultimately fell flat and briefly traded with decent losses.
The big move on the day was in USD/JPY, which continues to be the main event in 2024. That pair jumped to 142.27 from 140.50 in the second day of strong US bids. It looks to be closing on the highs and tracing out a three-candle reversal as traders settle dollar shorts ahead of the Fed decision.
USD/CAD briefly jumped on lower Canadian CPI and the prospect of a 50 bps cut in October. That is now closer to a 50/50 proposition but after a brief surge the pair retraced to nearly unchanged on the day. Macklem put most of the onus on growth numbers to support faster easing and good US numbers could be raising the idea that Canada will muddle along.
