An air of confidence in the US

There was a generally more confident mood in the world of investors yesterday as oil prices rose and US data calmed nerves. US crude oil stocks dropped by 6.422 million barrels and that prompted higher oil prices and US import prices fell for the first time since October 2020, suggesting the wave of inflation may be plateauing. The result was that the GBPUSD stabilised in a 1/2 cent range just above $1.38 and the EURUSD rate nestled into an even tighter 30 basis point range just above $1.1800.

US traders’ attention now turns to this afternoon’s US retail sales and weekly jobless claims data, which ought to underpin the positive mood. However, the main event for the next few days will be the Federal Reserve’s meeting and statement next week. Every word of that statement will be dissected for cues on interest rate changes and bond purchase reductions. The USD will have a busy few days.

Canada’s inflation at 4.1% is highest since 2003

The Canadian Dollar was lively yesterday after Canada’s inflation rate jumped to 4.1%. It hasn’t been that high since 2003. Obviously, this is a year-on-year calculation and last year was [insert preferred derogatory word here] but that was still a shock. It didn’t play well for Prime Minister Trudeau, who is in the midst of a tight election battle. Voting is on Monday. Expect CAD volatility over the next two days and in the early part of next week. GBPCAD dropped on the inflation data because it may prompt earlier than expected monetary tightening from the Bank of Canada. This pair starts Thursday at 1.7480, ¾ of a cent down from yesterday’s high.

US weekly jobless claims in focus

The Australian Dollar has had a busy night. A loss of 146,300 jobs didn’t stop the unemployment rate from falling to 4.5% in August. That’s the lowest it has been since January 2009. Add in a 5.8% rise in new home sales and you could imagine the Aussie Dollar should be much stronger. It’s not. Ongoing covid concerns and a notable slowdown in China are combining to hold the AUD back. GBPAUD is just below 1.89; some of the highest levels we have seen in September.

And it is both Guacamole Day and Play Dough Day. Don’t get them mixed up though. Play-Dough is so salty. Don’t ask how I know. Have a great day.

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