Log in to today's North American session Market wrap for September 22
Markets started the week on the back foot today, but shook off early concerns as US tech shares continued their impressive rise.
This was fueled by a promise from Nvidia to invest up to $100 billion in OpenAI, boosting excitement around artificial intelligence.
Wall Street's main indexes surged on Friday after Federal Reserve Chair Jerome Powell hinted at a possible interest rate cut during his speech at the Jackson Hole Symposium.
The Dow Jones rose 887.83 points (1.99%) to a record high of 45,680.14. The S&P 500 gained 102.14 points (1.61%) to 6,472.31, and the Nasdaq climbed 421.85 points (2.00%) to 21,520.79.
We expect a 0.4% month-on-month core CPI print in the US today, above the 0.3% consensus. That should offer the dollar support, but we don’t think that will prompt markets to seriously price out a September cut, meaning we can see decent buying in the EUR/USD dips. Headlines on upcoming US-Russia-Ukraine talks also remain relevant for markets
The same day President Trump installed an (interim) dovish ally in the FOMC, the Bank of England struck a more hawkish tone, narrowly voting in favour of another 25bp rate cut. The US calendar is very quiet today, and some focus will be on Canada’s jobs figures. EUR/USD may wait until next week for a break above 1.170
The first four days of the week were characterised by a broad dollar rally, as a solid GDP report, the signing of trade deals and a hawkish Fed acted to chip away at the greenback’s risk premium.
Following Friday's soft US jobs report, the dollar looks to stay offered this week. The firing of the Bureau of Labor Statistics chief, after President Trump accused the agency of manipulating jobs data for political gain, also adds pressure. And the early resignation of Fed Governor Adriana Kugler – opening up the pick for Powell's successor – won't help
A US-EU deal is reportedly imminent and should follow the US-Japan 15% tariff blueprint. The ECB should anyway tread carefully and offer no new guidance, but comments about the euro’s strength can be read as dovish. We think EUR/USD may be close to a peak and we favour a correction in the near term. The yen’s rally also appears to have gone too far
European markets have opened to news of a US-Japan trade deal. Equity markets globally are rallying on the view that deals reduce uncertainty. The yen, however, is less certain of what this all means – especially given the prospect of an imminent resignation from PM Ishiba. Elsewhere, commodity currencies continue to do well as industrial metals rally
South Korea’s consumer sentiment index improved for the fourth straight month. It also suggests a moderation of housing prices, which should offer relief to the government and the Bank of Korea
Yesterday’s US inflation failed to validate dovish bets on the Fed and triggered a bounce in the oversold dollar. We see more room for hawkish repricing in the coming weeks, and accordingly, upside risks for USD. Today, the US PPI and the Fed Beige Book are in focus. In the UK, services CPI came in hotter than expected, but tomorrow’s jobs data will be key for GBP
Donald Trump continued his tariff reveals over the weekend, announcing that the EU and Mexico would be hit with 30% tariffs from August 1st. That's far more than what the EU expected — they were hoping for a figure closer to what the UK secured: a 10% tariff, with exceptions for key sectors like metals and pharmaceuticals. Instead, they got a big, fat 30%.
UK markets are beginning to price in the possibility that a new Chancellor could change the fiscal rules and loosen Britain's purse strings, at a time when annual debt issuance is already perilously high. That seems like a bit of a leap at this stage, but once again, Gilts are dragging UK asset markets lower
Payrolls day remains the most important one for markets. Even going into most pivotal Fed meetings we typically know what's going to happen. For payrolls, we think we know. And even if we did, the print itself can have a perverse effect. The big fear is we get a really bad one sometime soon. Feeling bullish? Fair. But, weak payrolls also means a higher deficit
For the first time in a while, most of the major currencies traded in tight ranges last week, with the exception of the yen, which continues to rally amid rising expectations for a faster pace of Bank of Japan policy
