Daily summary: Sizable declines the day before the important FOMC decision

6:57 PM September 19, 2023
  • Inflation data from Canada for August surprised the market. CPI inflation rebounded to 4.0% and core inflation to 3.3% on an annualised basis. Although the BoC has already completed hiking cycle, the market is now pricing in a 40% probability of a hike in October (before the CPI release it was 23%).
  • USDCAD was clearly losing ground today, even with the US dollar stable. The pair fell from around 1.35 to levels even below 1.34.
  • The CAD was also supported by, among other things, further rising crude oil. Brent tested the vicinity of the $96 level today, being the highest in 10 months. Many institutions indicate that the $100 level is a matter of time, but due to fragile demand, the price may not remain at this level.
  • OPEC+ representatives have indicated that a voluntary cut agreement is in place, but there is to be a review every month. If there are problems with demand, some production could be restored.
  • It was this speculation that led to a marked pullback in prices at the end of the day. 
  • Eurozone CPI inflation came in marginally below the preliminary reading of 5.2% (preliminary 5.3% y/y)
  • Data from the US housing market performed very mixed today. Housing starts fell by as much as 11.3% m/m, but on the other hand, building permits rose by 6.9% y/y
  • NATGAS rose around 2.85 today, linked to further maintenance work at Norway's largest gas field Troll
  • EURUSD continued Monday's rebound but retreated below the 1.0700 level again at the end of the day, with yields rising
  • On Wall Street, the day before the Fed decision, visible selling pressure is observed. The US100 loses almost 0,6%, while the S&P 500 is down 0.55%.
  • Cryptocurrencies continue to rise today on the wave of further reports of blockchain technology adoption among financial institutions, increasing debt in the USA, and upcoming regulations. Bitcoin gains 1.3% and is trading at around $27,200 level.

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