The US dollar is primarily stabilizing within tight ranges relative to the major currencies. The Japanese yen stands out as a notable exception, having declined to a new nine-month low as the greenback neared JPY155. In light of Japan’s finance minister’s numerous warnings, the market appears to remain unfazed. It appears that a tangible material intervention is improbable, particularly beyond the Tokyo markets. Negative sentiment surrounding the sterling following yesterday’s disappointing employment data has caused it to approach $1.3100, where options for GBP1.9 billion are set to expire today. Most emerging market currencies are experiencing weakness, although the PBOC has established the dollar’s reference rate at a new low since last October.

Equities are experiencing a rally today. The significant markets in the Asia Pacific region experienced a rally, with the exception of China and Australia. Europe’s Stoxx 600 is experiencing an upward trend for the third consecutive session, showing an increase of over 3% this week. US index futures are showing an upward trend, and the spot indices are likely to experience a gap up at the market open. The US Treasury market, which was closed yesterday, is experiencing buying interest today, with the 10-year yield decreasing by three basis points ahead of today’s auction, currently standing at approximately 4.08%, a level it has not closed beneath this month. European yields are generally showing slight firmness. The 10-year Gilt stands out, experiencing an increase of nearly three basis points to approximately 4.42%. Gold is currently consolidating following its pause just below $4150 yesterday. A slight decline beneath $4100 was purchased today. December WTI experienced an increase of over 2% from Monday to Tuesday; however, it is currently retracing approximately half of that gain today, hovering around $60.50.

The Dollar Index has tested the trendline that links the multi-year low on September 17 (~96.20) with the October lows (~98.00 and ~98.55) as of yesterday. The current value is approximately 99.45. DXY is currently experiencing a five-day decline, following a previous five-day increase. The daily momentum indicators are showing a downward trend. Currently, it is consolidating within the range of approximately 99.45 to 99.65. Initial resistance is observed around yesterday’s high of 99.75. Conversely, a breach of the 99.20 level could aim for the 98.75 region, which corresponds to the (38.2%) retracement of the rally that began from the September low. Approximately one-third of Federal Reserve officials are scheduled to speak today, with an additional three set to address the public tomorrow. The futures market indicates an approximate 67% probability of a rate cut next month, showing minimal variation since the FOMC meeting. Meanwhile, following Monday’s robust response to the $58 billion three-year note sale, the Treasury is set to issue $42 billion in 10-year notes today. The yield remains almost unchanged from the previous auction, approximately 4.11%. The protracted government shutdown appears poised to conclude either today or tomorrow. In a separate report, the ADP indicated that private sector jobs experienced a decline of 11,250 on average during the four weeks ending October 25. The ADP private sector jobs estimate has consistently aligned with the BLS estimate. During the three-month period ending in August, the Bureau of Labor Statistics estimated an average private sector job growth of 29,000, while the ADP estimate stood at 26,000. During the initial eight months of the year, the Bureau of Labor Statistics estimated that the private sector added an average of 74,000 jobs per month, whereas ADP’s estimate was slightly lower at an average of 73,000 jobs.

The downward trendline established from the September 17 multi-year peak near $1.1920, along with the two highs observed in the latter part of October around $1.1590, was breached yesterday when the euro approached approximately $1.1605, although it ultimately closed beneath that level. The asset is currently consolidating within a tight range of approximately $1.1565 to $1.1585 as observed today. A decisive breakout above $1.1600 aims for the $1.1630-40 range first, followed by the $1.1665 zone. Tomorrow, the eurozone is set to release its industrial production figures for September. Germany, France, and Spain exhibited increases (1.3%, 0.8%, and 0.4%, respectively) following declines in August. Italy is set to release its data prior to the overall statistics. The median forecast from Bloomberg’s survey indicates a projected 0.7% rise in industrial output. This follows an average increase of 0.1% per month during the first eight months of the year, contrasting with a 0.2% average monthly decrease observed from January to August 2024, and a decline of -0.3% per month in the same period of 2023. Nonetheless, with Q3 GDP already available and scheduled for review at the week’s end, the September figures are expected to exert minimal influence.