USD lifted by short-covering into FOMC – Scotiabank

Source Fxstreet

Markets are settling into ranges as investors curb risk-taking ahead of the FOMC. Stocks are trading narrowly after yesterday’s US market declines. Bonds are a little softer in Europe while Treasurys are steady. Caution has given the USD a broad— short-covering—lift versus the majors. The main market mover is Turkey where the TRY and local bonds plunged on renewed domestic political risk, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

USD firmer as markets trade cautiously into Fed decision

"There does appear to be a lot of uncertainty about what the Fed will deliver today. No change in policy is expected but rather more interest will be in how Fed Chair Powell articulates the risks around the outlook as the economy appears at risk of weakening sharply in Q1 amid uncertainty over US trade policy while core PCE remains sticky and inflation expectations have jumped as consumers fret about the impact of tariffs." 

"Swaps reflect a little more than 50bps of anticipated easing this year so what the dot plot implies in this respect will be key to how the USD reacts. It’s hard seeing the Fed sound more hawkish at this point but that might be what the USD needs to stage any sort of major turnaround. The Fed is the main event today but the late afternoon release of the January Treasury International Capital (TIC) flows data may warrant some attention." 

"Net inflows have been positive, if slowing after a sharp increase in net inflows last September, but December’s data reflected the largest ever one-month net outflow but official (i.e., central banks etc.) accounts from US assets. Earlier, the BoJ left policy unchanged, as expected. More tightening seems likely (possibly at the next policy decision), given rising wages and upside risks to the inflation outlook."

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Gold holds steady below $4,150 amid elevated US yields Gold price (XAU/USD) trades on a flat note near $4,140 during the early Asian session on Tuesday. Pressure from a stronger US Dollar (USD) and elevated US Treasury yields was offset by reduced expectations of a Federal Reserve (Fed) rate hike this month.
Author  FXStreet
Oct 06, Tue
Gold price (XAU/USD) trades on a flat note near $4,140 during the early Asian session on Tuesday. Pressure from a stronger US Dollar (USD) and elevated US Treasury yields was offset by reduced expectations of a Federal Reserve (Fed) rate hike this month.
placeholder
WTI rises to near $89.50 as Middle East supply threats offset Persian Gulf recoveryWest Texas Intermediate (WTI) oil price extends its gains for the second successive day, trading around $89.50 per barrel during the Asian hours on Wednesday. Crude oil climbed as persistent risks to Middle East energy flows overshadowed signs of rising supply from the region.
Author  FXStreet
Oct 07, Wed
West Texas Intermediate (WTI) oil price extends its gains for the second successive day, trading around $89.50 per barrel during the Asian hours on Wednesday. Crude oil climbed as persistent risks to Middle East energy flows overshadowed signs of rising supply from the region.
placeholder
【Daily Brief】Gold rebounds 1% off a two-month low, Nasdaq drops 1.25% and yields ease — the storm premium keeps WTI near $91Gold trades at $4,174 after rebounding from Wednesday's $4,090 two-month low, the Nasdaq fell 1.25% while the Dow edged higher, and the 10-year Treasury eased to 5.23% from the week's highs. Hurricane Isaias keeps about 25% of Gulf output shut in with WTI near $91, and bitcoin holds below $82,000. The next scheduled tests are the EIA report on 15 October and the FOMC on 27-28 October.
Author  Irene Q.
Yesterday 06: 28
Gold trades at $4,174 after rebounding from Wednesday's $4,090 two-month low, the Nasdaq fell 1.25% while the Dow edged higher, and the 10-year Treasury eased to 5.23% from the week's highs. Hurricane Isaias keeps about 25% of Gulf output shut in with WTI near $91, and bitcoin holds below $82,000. The next scheduled tests are the EIA report on 15 October and the FOMC on 27-28 October.
placeholder
Hurricane Isaias has shut in a quarter of Gulf oil output — can WTI clear $92 before Thursday's EIA report?WTI trades at $90.80 after rebounding roughly 3% from Wednesday's $87.96 low as Hurricane Isaias — the Atlantic season's first — forces producers to shut in about 25% of US Gulf of Mexico output. Brent holds at $103.41. The first official read on the disruption arrives with the EIA weekly petroleum report on Thursday 15 October — here are the key levels and both scenarios.
Author  Irene Q.
Yesterday 06: 38
WTI trades at $90.80 after rebounding roughly 3% from Wednesday's $87.96 low as Hurricane Isaias — the Atlantic season's first — forces producers to shut in about 25% of US Gulf of Mexico output. Brent holds at $103.41. The first official read on the disruption arrives with the EIA weekly petroleum report on Thursday 15 October — here are the key levels and both scenarios.
placeholder
US September CPI preview: inflation set to hit 3.7% — will the Fed hike in December?US September CPI lands Wednesday with headline inflation seen at 3.7% y/y and core at 0.2% m/m. December hike odds sit near 70% — here are the scenarios, the calendar and the key levels.
Author  Irene Q.
3 hours ago
US September CPI lands Wednesday with headline inflation seen at 3.7% y/y and core at 0.2% m/m. December hike odds sit near 70% — here are the scenarios, the calendar and the key levels.
Related Instrument
goTop
quote