The US dollar is currently appreciating against all G10 currencies today; however, it has yet to surpass the ranges established earlier this week. The Dollar Index is experiencing an upward trend for the fourth consecutive session this week, successfully rebounding from last week’s 0.55% decline. The dollar shows a varied performance against emerging market currencies. The JP Morgan Emerging Market Currency Index has increased approximately 0.15% this week, whereas the MSCI gauge has decreased by around 0.10%. Equities are generally showing strength today. In the Asia Pacific region, the Nikkei and China’s CSI 300 experienced gains exceeding 1%. However, South Korea’s Kospi surged by 2.5%, leading the region with an impressive 5.1% increase this week. President Lee is scheduled to meet with President Trump on October 29 and President Xi on November 1. The South Korean won rebounded from six-month lows after the finance minister’s verbal intervention. Even with a more favorable preliminary PMI, the euro is having difficulty gaining momentum, and the Stoxx 600 is experiencing a slight decline. US index futures are showing strength.
Excluding the Japanese government benchmark 10-year yield, which decreased by a basis point, the majority of other significant bond yields are showing strength. European yields are predominantly 2-4 basis points higher, with France experiencing the most significant increase, while the 10-year Gilts are performing relatively well, showing nearly flat movement. The 10-year Treasury yield is marginally stronger, hovering just above 4.0%. Canada’s 10-year yield has increased by approximately 3.5 basis points, now standing at 3.09%. Gold has decreased by 1.6% following an increase of nearly 0.70% the previous day. The current low stands just beneath $4,048. The value stabilized at approximately $4,356 on Monday. December WTI is currently trading within a tight range of approximately $61.20 to $62.15, positioned at the upper end of yesterday’s rally that brought it to around $62.20.
The Dollar Index approached 99.15 midweek and maintained that level yesterday. The market holds steady today, fluctuating within a 10-tick range around 99.00. The peak observed last week approached 99.50. The DXY experienced consolidation yesterday, maintaining its position above Wednesday’s low, slightly under 98.80. Today marks the highest activity level on the US economic calendar since the government shutdown commenced just over three weeks ago. The September CPI is set to be reported today, which will facilitate cost-of-living adjustments in Social Security and various other programs. A 0.4% increase in the headline will elevate the year-over-year rate for the fifth consecutive month, and at 3.1%, it would represent the highest level since May 2024. The core rate has experienced an increase over the last four months; however, the median forecast from Bloomberg’s survey indicates it remained unchanged last month at 3.1%.
Most Fed officials prefer to overlook the recent rise in inflation, with many perceiving the effects of the tariffs as transitory. Furthermore, the balance of risks indicates that the potential for further deterioration in the labor market is heightened. The market has almost completely priced in a Fed cut for next week, and with the blackout period in effect until the meeting, officials have limited ability to alter the narrative surrounding it. The preliminary October PMI is scheduled for release today, with expectations pointing towards a softer outcome. The composite PMI has experienced a decline for the third consecutive month and the fourth time in five months.