Forexlive Americas FX news wrap: Empire Fed rises to the best since 2022

• Empire Fed Sept manufacturing survey +11.5 vs -4.75 expected
• Canada July manufacturing sales +1.4% vs +1.1% expected
• ECB’s Lane: Incoming data on wages and profits have been in line with expectations
• ECB’s Kazaks: Interest rates will continue to be lowered
• WH Brainard: It is now important to safeguard progress in US labor market
• Former NY Fed Pres Dudley says it’s time for 50 basis points
• Jon Hilsenrath: The Fed will cut by 50 bps
• Canada extends 30-year mortgage ammortization for newly-built homes

Markets:

• WTI crude up $1.82 to $70.46
• US 10-year yields down 3 bps to 3.61%
• S&P 500 up 0.2% in sixth straight gain
• Gold up $6 to $2582
• AUD leads, USD lags

The newsflow was light today but it wasn’t exactly lifeless. USD/JPY broke through 140.00 and fell to a 2024 low of 135.59 early in the European session before finding a bottom. It grinded all the way back to 140.65 late with the biggest part of the move coming after the stronger Empire Fed.

Elsewhere though, the US dollar couldn’t get much traction and it’s on track to close at the lows against the pound and Aussie with the euro near the top of the daily range as well. The talk of 25 vs 50 is deafening with the latest pricing at 63% for 50 bps. Eyes are attuned to WSJ leaks and I would keep them there. By the same token, the Fed may be teed up for a lively debate and Powell isn’t sure yet what to leak.

The implications for the dollar aren’t straightforward beyond the initial kneejerk. Frontloading cuts could ultimately mean the terminal rate is higher and Powell could touch on those kinds of talking points on Wednesday.

This article was written by Adam Button at www.forexlive.com.