Economic Indicators & Central Banks:
- The first US presidential debate, as expected, did not significantly impact the markets, and it likely did little to ease concerns regarding the country’s political and economic future. Following the debate, market odds for a Trump win have slightly increased, potentially indicating higher inflation risks.
- This scenario could lead to the Fed maintaining higher interest rates for a longer period, keeping US Treasury yields elevated and the Dollar strong.
- The weaker than expected consumption data and claims data inspired a bounce in Treasuries as well after a few days of losses.
- Wall Street managed small gains.
- UK Q1 GDP growth revised up to 0.7% q/q from 0.6% q/q reported initially. For the BoE stronger than expected growth, however, will make it more difficult to cut rates as underlying inflation pressures remain higher than officials would like.
- The primary market focus remains on the release of the US core PCE, which is expected to have risen 2.6% annually in May, down from April’s 2.8%. If the data meets forecasts, it could strengthen the belief that the Fed will start its easing cycle in September.
- The first round of French elections is set to begin this Sunday.
Asian & European Open:
- Stocks rose marginally, with some help from a bounce in tech shares. The NASDAQ rallied 0.3%, with the S&P and Dow each up 0.09%.
Financial Markets Performance:
- The USDIndex gave up the 106 handle after testing 106.082 overnight and dipped to 105.708 before clawing back to 105.931 into the close.
- The US Dollar reached a 10-day high against the Mexican peso and gained strength against other trade-sensitive currencies, including the Canadian dollar.
- The Yen, facing relentless pressure from the US Dollar, surged past the 161 Yen mark, peaking at 161.27, while the Euro also reached a record high against the Japanese currency.
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Andria Pichidi
Market Analyst
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