Friday October 13th, 2023

The USD is lower, oil prices higher, equity markets are flat, while US yields trends lower. The higher-than-expected US CPI figures released yesterday showed that inflation remains a concern. The Treasury yield hitting a 16-year low may help the FED in slowing down the economy avoiding the need for immediate rate hike, but it certainly pushes back the timeline for a lowering of interest rate. The Israel/Hamas war continues to rage on as Israel urges civilians to leave Gaza City. A ground invasion is widely expected as Israel amassed troops/tanks along the border. Worries about Hezbollah’s participation in the conflict remain.

In other news.? The GOP is still looking for a speaker as Scalise backs out as it became clear that he would not be elected by the House. Secretary of State Blinken meets Mahmoud Abbas, King Abdullah in reach out effort amidst Israel-Hamas conflict.

In currency news. The USD is taking a breather this morning after yesterday’s biggest daily increase since March. Michigan Consumer sentiment index is to be release later this morning. The CNY is ending the trading week down slightly (0.07%) as is the THB (0.11%) and the MYR (0.32%). The JPY traded above the 150 level and is settling slightly below. Pressure remains on the AUD and NZD trading down 0.1% and 0.4% respectively, while the MXN and ZAR are trading higher (0.10%).

In commodity news.?US tighten sanctions on Russian Crude oil sales pushing oil futures nearly 4% higher. Gold starts the last trading day of the week up 1.0%, NatGas (-2.8%), Copper (0.15%), while Soybean and Wheat are up 0.4% and 1% respectively.

CAD is mildly benefiting from the surge in oil prices this morning and remains near the lows of the week.

EURCAD trades slightly lower this morning as it remains in a tight range.

EUR – while yesterday’s ECB members comments were pointing to a possible peak in interest rates , the Bundesbank’s Chief reiterated the need to overcome high inflation rates.?The Euro trades near the week lows as it fails to recover from yesterday’s 1% drop.

GBPEUR – with the risk of a UK slowdown increasing the GBP/EUR recaptured part of yesterday’s loss.

GBP continues to face headwind as persistent inflation and weak manufacturing data affect investor sentiment.