USDIndex tanked to 104.50 from 106.20, before recovering, Yields & the VIX dropped to 4 mth lows and Stocks rallied (NASDAQ +2.89%, now +20% from June lows). Cooler US CPI was the catalyst and expectations the FED is less likely to have to raise rates by 75 bp in September. Asian markets followed through too, (Hang Seng +2.08%,  Nikkei closed). European FUTS also higher. Oil pushed up to the $92 handle, Gold sank to $1786 and BTC moved higher again to breach $24K area. 

Fedspeak – voiced caution – Kashkari now a BIG HAWK talked of being “far, far away from declaring victory over inflation” and wants at least another 140 bp this year and sees rates topping at 4.4% in 2023, Evans (centrist  sees rates at 3.4% by December and Daly “not anywhere near done with inflation battle”. Cleveland Fed – “inflationary pressures remain broad based”.

• USDIndex plunged -1.6% as broad based USD selling took hold. More hawkish Fed comments helped lift the index to 105.20 now. AUD underperformed in Asian session.
• Equities – USA500 closed up 87.77pts (+2.13%) (4210), US500FUTS at 4227 now. DIS Big beat, Disney+ bigger than NETFLIX! & will raise prices from December – Shares up 3.98% on Wednesday & 6.85% after hours. Big tech all closed up 2%+.
• Yields 10-year yield sank but recovered to 2.78% at close. The 2/10yr. yield curve also remained firmly inverted at 43.8 bp.  
• Oil – rallied to test 200-hr MA at $92.00, holds the zone now.  
• Gold – rallied & spiked to $1800 resistance again before declining back under to support at $1788, 20-day MA now $1766.
• Bitcoin has surged to $24.5K now from $22.6k lows yesterday.
• FX Markets – EURUSD breached 1.0350 trades at 1.0300, USDJPY tanked from 135.00 pivot to 132.00 back to 132.70 now and Cable did the same rallying from 1.2080, pivot to 1.2260 resistance & back to 1.2215 now. 

 8.5% y/y.

Today – US Weekly Claims & PPI, IEA OMR, OPEC MOMR, Banxico Policy Announcement.

Biggest FX Mover @ (06:30 GMT) NZDCHF (+0.51%). Recovery from spike lower yesterday continues, back to 0.6040 now from 0.5945.  MAs aligning higher,  MACD histogram now positive & signal line neutral, RSI 61.57 & rising, H1 ATR 0.00080, Daily ATR 0.00558.

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Stuart Cowell

Head Market Analyst

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