The US dollar’s recovery accelerated today, yet this has not prevented gold from surpassing the $4000-mark in the spot market. With the US government remaining closed and no visible discussions to resolve the situation, the dollar’s appreciation appears to be indicative of unfavorable conditions in other regions. In the aftermath of the recent leadership election within the LDP, the yen has experienced a decline exceeding 3.5% this week, indicating that the sell-off may not yet be finished. The recent release of disappointing German economic indicators, coupled with the ongoing political turmoil in France, has resulted in a decline of the euro for the third consecutive session. It approached last month’s low near 1.16. On September 17, it attained a multi-year peak, approaching $1.1920. Today, there exists a degree of optimism regarding potential compromise in France. This sentiment has positively influenced French assets, yet it has had a negligible impact on the euro.

The Reserve Bank of New Zealand implemented a dovish 50 basis point reduction and signaled that its monetary easing cycle remains ongoing. The New Zealand dollar has depreciated to its lowest point in almost six months. In the prevailing firm US dollar environment, the Canadian dollar is exhibiting relative strength, sustaining only minor losses. The dollar exhibits strength relative to the majority of emerging market currencies. Equities exhibited a mixed performance across the Asia Pacific region, with the MSCI regional index breaking its six-day upward trend yesterday and experiencing a slight decline today. Europe’s Stoxx 600 has increased by slightly more than 0.5% and is on track to record a gain for the first time this week. US index futures exhibit a modest uptick. Bonds have experienced a rally.

European yields have decreased by 2-4 basis points, with French bonds at the forefront of this movement. The 10-year US Treasury yield has decreased by a basis point, now standing at nearly 4.11%. Gold surged to approximately $4046. November WTI is approaching a five-day peak at approximately $62.65. The Dollar Index maintained a position above 98.00 yesterday and established a solid footing before advancing today to nearly 99.00. The (61.8%) retracement of the decline since August 1 has been surpassed, slightly exceeding the late September high (~98.60). A potential bottoming technical pattern appears to have formed, and a move above 98.70 could indicate a correction back toward 100.25. The minutes from the recent FOMC meeting are likely to attract heightened scrutiny this time around. Initially, in light of the federal government shutdown, there exists a scarcity of official data to contend with. Secondly, the context surrounding Miran’s appointment to the board could warrant attention. The latest Summary of Economic Projections has been released, and Chair Powell presented the situation as if Miran was in a position of isolation.

Nonetheless, remarks from Governor Bowman, including those made yesterday, indicate that she may align with Miran at this month’s meeting, where he is expected to dissent once more in support of a 50 basis point cut. Minneapolis Fed President Kashkari, who is not a voting member this year, addresses the public today, although his perspectives have already been articulated following his remarks yesterday, where he indicated the expectation of two additional rate cuts within the year. Governor Barr addresses the advancements in community development and the role of the St. Louis Federal Reserve. President Musalem, who holds the vote this year, convenes the community development conference. Powell is set to deliver remarks tomorrow; however, these comments have been pre-recorded, and there will be no opportunity for questions and answers.