United States of America

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

Yesterday, September data on consumer confidence were published. The indicator fell from 105.6 points to 98.7 points, more than experts expected (103.9 points). Most respondents are concerned about the persistence of inflation and the reduction in available jobs, which increases the likelihood of further monetary policy easing by the US Fed. On the other hand, the August building permits increased from –3.3% to 4.6%, confirming the stabilization of the real estate sector. Investors paid attention to forecasts of the regulator’s further actions from leading brokerage firms. Most of them (Deutsche Bank AG, Barclays Plc., Morgan Stanley, Macquarie Group Ltd., The Goldman Sachs Group, Inc., and HSBC Holdings Plc.) expect that the agency will cut the interest rate by 25 basis points in November and December. However, analysts at Bank of America Corp., JPMorgan Chase & Co., and Citigroup Inc. expect the adjustment in the cost of borrowing in November to be –50 basis points and another –25 basis points in December.

Eurozone

EUR is strengthening against the main USD, EUR, and GBP.

Investors are focused on comments from European officials. Thus, the Dutch Central Bank governor, Klaas Knot, said that the European Central Bank (ECB) would continue to ease monetary policy until at least mid–2025, bringing interest rates to 2.0–3.0%. Bundesbank governor Joachim Nagel said Germany’s economy would recover as temporary factors such as high inflation and borrowing costs ease and criticized the media for being too pessimistic and exaggerating economic problems.

United Kingdom

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

Today, Bank of England board member Megan Green urged officials to take a cautious approach to reducing interest rates due to the ongoing risks of accelerating inflation. She noted that service price dynamics (5.6% in August) and wage indexation (5.1% in July) still significantly exceed the regulator’s target level. Recall that most experts assume that the Bank of England will adjust borrowing costs by –25 basis points at its November meeting by the end of the year.

Japan

JPY is weakening against EUR, GBP, and USD.

The August corporate service price index remained at 2.7% YoY instead of the expected decline to 2.6%. According to experts, this means that more and more companies are passing on the costs of increasing wages to consumers, including them in the cost of goods and services. Earlier, the head of the Bank of Japan, Kazuo Ueda, said he would closely monitor changes in corporate inflation in October when many national corporations traditionally revise prices for goods. These statistics will probably be key for the regulator to decide on a further increase in the interest rate.

Australia

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

The August average weighted consumer price index fell from 3.5% to 2.7% YoY, meeting experts’ expectations. The inflation growth in the country reached a three-year low. Investors reacted to these statistics very cautiously since representatives of the Reserve Bank of Australia (RBA) had previously stated that this dynamic is temporary and does not serve as a basis for starting to reduce interest rates in the short term. Treasurer Jim Chalmers said the data was generally positive but caution was needed in choosing the monetary policy vector, as monthly data can be volatile.

Oil

Oil prices are falling due to a technical correction, as the main fundamental factors remain positive.

Yesterday, the Chinese authorities announced a large stimulus package that should support the recovery of the national economy and increase demand for fuel from their leading importer. At the same time, the conflict between Israel and the Lebanese militant organization Hezbollah is escalating, increasing the risk of supply disruptions from the region. Meanwhile, the report on oil reserves from the American Petroleum Institute (API) recorded a decrease of 4.339M barrels. Today, investors are waiting for the publication of similar data from the US Energy Information Administration (EIA). According to preliminary estimates, the indicator will decrease by 1.300M barrels, supporting oil quotes.