United States of America

USD is falling against EUR, GBP, and JPY.

The negative dynamics are developing against a sharp drop in the probability of the US Fed interest rate adjustment at the meeting on September 18 by –25 basis points. Today, according to the Chicago Mercantile Exchange (CME) FedWatch Instrument, it is 41.0%, while the indicator for a change of –50 basis points is 59.0%. The revision of analysts’ forecasts may be a reaction to Friday’s statements by the head of the Federal Reserve Bank of New York, John Williams. He almost openly stated that a reduction in the cost of borrowing is necessary, and the key parameters that can affect this, the labor market and inflation, are stable and enough. If the popularity of the scenario of a more significant monetary policy easing increases this week, the dollar will weaken.

Eurozone

EUR is strengthening against USD but is weakening against JPY and GBP.

The currency started the week in the red zone under pressure from macroeconomic statistics. The Q2 wage level fell from 5.20% to 4.50%, and the labor cost index fell from 5.00% to 4.70%. The publication of August inflation reports in the leading Eurozone economies continues, and the Italian consumer price index was 0.2% MoM and 1.1% YoY, approaching pre-COVID–19 levels and confirming a confident positive trend. Thus, in all countries of the region, inflation is steadily weakening, justifying the interest rate cut at the last meeting.

United Kingdom

GBP is strengthening against EUR, JPY, and USD.

The currency’s position is neutral again, confirmed by statistics on the real estate market. The September housing price index from the research company Rightmove Group Ltd. increased from –1.5% to 0.8% MoM and from 0.8% to 1.2% YoY. The indicator has been in the positive zone for the eighth month. However, stable growth is observed only in August and September, reflecting the recovery of the most lagging sector of the national economy. The Bank of England meeting on interest rates is due on September 19, after the US Fed, and the decision of the US regulator’s officials will be one of the factors that will influence the monetary policy of The United Kingdom. For now, forecasts suggest maintaining the cost of borrowing at 5.00%, supporting the pound.

Japan

JPY is strengthening against USD and EUR but is falling against GBP.

The main driver of the movement is expectations of Friday’s meeting of the Bank of Japan: most officials of the department support an increase in the interest rate, calling the main goal 1.0%, which can be reached by the middle of next year. On the other hand, experts’ forecasts today have shifted towards maintaining the indicator at 0.25%, as the American dollar is actively weakening before the meeting of the US Fed, on whose monetary policy the Japanese regulator is guided. A decrease in the US borrowing cost by 25 basis points is already included in the quotes. However, an adjustment of –50 basis points can significantly affect the yen, highly dependent on the difference in interest rates. So, the Bank of Japan may refuse to change monetary policy in September and continue to tighten it after assessing the effect of the US Fed’s actions.

Australia

AUD is declining against GBP and JPY but is strengthening against EUR and USD.

The quotes are neutral today, as at the end of last week, against macroeconomic statistics. Thus, the Q2 jobs in the services sector were 416.5K. 359.1K, or 81.2%, were full-time positions, 0.5% more than last year. The average annual salary of employees in the sector reached 35.337K dollars, and 18.2% of all those employed in the industry received less than 10.0K dollars, 2.4% less than before. The weakening of the key labor market indicators is the main argument for Reserve Bank of Australia (RBA) officials to keep the interest rate at 4.35%.

Oil

Oil prices are stable today. The upward trend from the end of last week has been interrupted, and the quotes are holding just above 74.00. The market is under pressure from Chinese statistics. The August unemployment rate adjusted from 5.2% to 5.3%, which was one of the reasons for the decline in retail sales from 2.7% to 2.1%. Industrial production fell from 5.1% to 4.5% YoY, and consolidated capital investment fell from 3.6% to 3.4%, confirming experts’ concerns about a decline in global demand for oil. Tomorrow, the American Petroleum Institute (API) will report on the weekly change in oil reserves. In the event of an increase, the growth of oil quotes will be interrupted.