Here is what you need to know on Friday, September 27:
Risk-on sentiment seen in global markets on Thursday extends into Friday, as a raft of Chinese stimulus measures continue to lift investors’ confidence. The People's Bank of China (PBOC) finally lowered the reserve requirement ratio (RRR), the required minimum capital banks must hold in reserve, by 50 basis points (bps), effective from Friday. The Chinese central bank also cut the seven-day repo rate to 1.5% from 1.7%.
Despite the risk-rally in Asian indices and higher US S&P 500 futures, the US Dollar is looking to build on the overnight recovery, fuelled after a brief dip in early opening hours following the dovish remarks from US Federal Reserve (Fed) Governor Lisa Cook.
Cook said that she “wholeheartedly supported 50 bps rate cut,” adding that the “normalization of economy, particularly of inflation, is quite welcome.”
The Greenback suffered on Thursday, as the European and Wall Street stocks advanced on rate-cut momentum while the mixed US Jobless Claims and Durable Goods Orders data failed to inspire USD buyers.
Several Fed policymakers made their scheduled appearances on Thursday, including Fed Chair Jerome Powell. However, only two of them spoke on monetary policy. Fed Governor Cook supported the 50 bps rate cut move in September while Governor Michelle Bowman stuck to her hawkish rhetoric.
Markets are currently pricing in about a 50% chance of a 50 basis points (bps) rate reduction by the Fed in November, according to the CME Group’s Fed WatchTool, down from over 60% seen a day ago.
The next directional move in the USD hinges on the upcoming US core Personal Consumption Expenditures (PCE) Price Index, the Fed’s most preferred inflation gauge, which could affirm bets of an outsized next rate cut. Additionally, the quarter-end flows could come into play and stir markets.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.14% | 0.25% | 1.01% | 0.21% | 0.30% | 0.45% | 0.25% | |
| EUR | -0.14% | 0.11% | 0.85% | 0.04% | 0.17% | 0.30% | 0.13% | |
| GBP | -0.25% | -0.11% | 0.74% | -0.05% | 0.06% | 0.22% | 0.02% | |
| JPY | -1.01% | -0.85% | -0.74% | -0.79% | -0.67% | -0.53% | -0.70% | |
| CAD | -0.21% | -0.04% | 0.05% | 0.79% | 0.08% | 0.26% | 0.06% | |
| AUD | -0.30% | -0.17% | -0.06% | 0.67% | -0.08% | 0.16% | -0.04% | |
| NZD | -0.45% | -0.30% | -0.22% | 0.53% | -0.26% | -0.16% | -0.19% | |
| CHF | -0.25% | -0.13% | -0.02% | 0.70% | -0.06% | 0.04% | 0.19% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Across the FX board, USD/JPY remains volatile, falling as low as 144.75 on Tokyo inflation data before rebounding sharply to beyond 146.00. The Japanese Yen saw a steep sell-off, as Japan’s ruling Liberal Democratic Party’s (LDP) leadership race headed to a run-off between ex-defence minister Shigeru Ishiba and economic security minister Sanae Takaichi. However, JPY buyers jumped back after the former won the battle to become the country’s next Prime Minister. Takaichi was the one who always favored keeping interest rates lower. The pair was last seen trading at 143.77, shedding 0.70% so far.
The higher-yielding Australian Dollar shrugged off the risk-on mood, as AUD/USD corrected from 19-month highs on a broad US Dollar rebound. The Aussie was last seen trading at 0.6870.
USD/CAD is bouncing back to 1.3500, as Oil price mires in two-week troughs. The black gold extends the downtrend, as markets expect increased oil output from Libya and the OPEC+. WTI is currently trading modestly flat on the day to trade near $67.25.
GBP/USD is consolidating weekly gains near 1.3400, slightly on the back foot as the US Dollar upswing offset the risk-on market profile.
EUR/USD is holding losses below 1.1200 early Europe, having faced rejection at that level on Thursday. The Euro remains pressured by the latest Reuters reports, citing sources, ECB doves are likely to fight for an October rate cut after weak data while the push for an October rate cut is likely to face resistance from ECB hawks arguing for pause.
Gold price is treading water below the record high of $2,686. Overbought conditions on Gold’s daily chart keep buyers defensive.
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EUR/USD extends losses toward 1.1100 on increased dovish ECB bets
EUR/USD accelerates decline toward 1.1100 in European trading on Friday. Softer French and Spanish inflation data ramped up Oct ECB rate cut bets, weighing on the Euro. However, the downside could be cushioned by a wobbly US Dollar, as US PCE inflation looms.
USD/JPY slides 1% toward 143.00 as Ishiba wins LDP leadership race
USD/JPY is seeing a fresh sell-off toward 143.00 in the European session on Friday. The pair loses over 300 pips, as the Japanese Yen rebounds on Shigeru Ishiba's win in the LDP leadership run-off. Sanae Takaichi, who favored keeping interest rates lower, was expected to win the race.
Gold price pulls back from record high ahead of US PCE Price Index, bullish bias remains
Gold price attracts some sellers on the last day of the week and retreats further from the all-time peak, around the $2,685-2,686 region touched on Thursday. The downtick is sponsored by the emergence of some US Dollar buying, which tends to undermine demand for the commodity.
US core PCE set to show continued disinflation trend, reinforcing Federal Reserve easing cycle
The core Personal Consumption Expenditures Price Index is seen rising 0.2% MoM and 2.7% YoY in August. Markets have already priced in near 50 bps of easing in the next two Federal Reserve meetings. A firm PCE result is unlikely to move the Fed’s stance on policy.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
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