The foreign exchange market is quiet today. The greenback is trading within narrow ranges, showing a slightly softer bias against most G10 currencies, except for the Swiss franc and Canadian dollar. The news flow is minimal, and the leadership in the North American market appears to be anticipated. The US has initiated a new sectoral investigation focusing on robotics, industrial machinery, and medical devices. The investigation can last 270 days under Section 232 of the Trade Expansion Act. The White House budget office is reportedly preparing for significant permanent layoffs in the event of a government shutdown, which appears to be becoming more likely.
During a funding lapse, workers classified as nonessential are usually furloughed; however, the administration seems to be indicating a risk of permanent dismissal for them. Approximately 40% of federal employees are frequently deemed nonessential during these times. Equities are generally weaker following yesterday’s losses. In the Asia Pacific region, Japan, China’s CSI 300, and Australia, among the large exchanges, went against the trend. Europe’s Stoxx 600 has decreased by approximately 0.40%, following a decline of about half that amount yesterday. US index futures are relatively stable, though showing a slight downward trend. European benchmark 10-year yields show slight variations, while the 10-year Treasury yield is slightly lower, hovering around 4.13%-4.14%. The US Treasury concludes this week’s auctions with $44 billion in seven-year notes and $185 billion in bills.
Gold is stronger near $3754 as it recovers about half of yesterday’s drop. The record high was established on Tuesday at approximately $3791. November WTI closed above $65 yesterday, marking its highest close since the beginning of this month. It is currently positioned just below that level today, while generally staying above the 200-day moving average around $64.35. The Dollar Index increased for the first time this week yesterday, nearing the 97.90 level. The market is stabilizing at the higher end of yesterday’s range. The range has been limited to approximately 97.75-97.90 today. As long as the nearby support at 97.60 remains intact, the next target is 98.25. A move above that level prepares for a test of the stronger resistance near 98.70. Today, a variety of US data is being released, including the advance goods trade balance and the preliminary August durable goods orders. As Q3 comes to a close, the adjustment of Q2 GDP holds minimal significance. Considering the emphasis on the labor market and the recent fluctuations, weekly jobless claims could be the key data point today. Meanwhile, the Treasury wraps up this week’s sales with $185 billion in bills and a $44 billion seven-year note auction.
Lastly, at least eight of the 19 Federal Reserve governors and regional presidents are speaking today, featuring a balanced mix of hawks and doves. Monitor Dallas Fed’s Logan for perspectives on the Fed’s balance sheet and quantitative tightening. In defining US strategic interest broadly, many do not believe that Argentina poses a significant systemic risk. The spread has been contained. Last week, the Mexican peso and Brazilian real reached new highs for the year, while the Colombian peso achieved the same on Tuesday this week. The US does not consider it a major trade partner. The attraction appears to be more about ideology than economics.