The NZD is the strongest and the CAD is the weakest as the NA session begins

As the NA session begins, the NZD is the strongest and the CAD is the weakest of the major currencies. The USD is sitting near the middle of the range of currencies with a modest downward bias before the release of the key CPI data at 8:30 AM ET. The expectation is for a gain of 0.1% for the headline and 0.2% for the core measure. The YoY is expected at 2.3% (vs 2.5% last month) and 3.2% (vs 3.2% last month). The problem is the core CPI still above 3.0%.

The initial jobless claims will also be released with expectation of 230K vs 225K. Will there be an impact from Hurricane Helene/the dock worker strike? Be aware there may be some wonkiness

Overnight, the BOJ Deputy Governor Ryozo Himino spoke today and said that rate hikes are possible if the July economic outlook report meets targets, mentioning record wage increases in Japan. Decisions will be data-driven and meeting by meeting, with real interest rates still negative. The BOJ is gathering more data on wage hike impacts and preparing for next year’s wage negotiations. Himino also stated that the BOJ has enough time to monitor financial markets, though no clear consensus exists on communication improvements among policymakers. Markets remain somewhat unstable – and stability has been a pre-requisite for the BOJ – but further rate hikes cannot ruled out either.

The USDJPY is modestly lower (JPY higher) today after moving up (and surpassing modestly) the August 15 high at 149.35. The CPI (and initial claims) risk event will be a key determinant fo whether the price continues the run higher with the 50% and 100/200 day MA in play above 150.00 at 150.75 and then 151.28 (ultimately) or back down toward the broken 38.2% at 148.11 and then a key swing area at 147.30 area.

The ECB September minutes highlighted resilient global activity growth, despite recent negative surprises in manufacturing output that posed short-term challenges. Key points include:

• Wage pressures, especially in services, were identified as a major inflation risk, with concerns that productivity gains were not offsetting wage increases as expected.
• Risks to the economic outlook were seen as two-sided, with the potential for growth downturns or persistent inflation.
• Some scenarios suggest a possible suspension of the rate-cutting cycle due to structural factors or unexpected inflationary pressures.
• Overall, the incoming data implied a downward revision in growth expectations, with flexibility on the speed of policy adjustment

The EURUSD is trading above and below the 100-day MA at 1.0933 today and ahead of the US data at the bottom of the hour. Yesterday the price moved below a swing area between 1.0941 to 1.0949 (and the 61.8% at 1.0944), but has been stalled above and below the key 100 day MA. If the price moves above the 1.0949, look for more upside probing on the failed break of the 100 day MA.

ON the downside, moving away from the 100 day MA would increase the bearish bias with a swing area around 1.0900 to 1.0913 and below that the 200 day MA at 1.0874.

A snapshot of the other markets as the North American session begins shows:

• Crude oil is trading up $0.88 or 1.20% at $74.12. At this time yesterday, the price was at $73.17
• Gold is trading up $4.91 or 0.19% at $2612.30. At this time yesterday, the price was $2618.20
• Silver is trading up $0.09 or 0.31% at $30.57 . At this time yesterday, the price is at $30.66
• Bitcoin is trading at $61,193. At this time yesterday, the price was at $62,145
• Ethereum is trading at $2403.10. At this time yesterday, the price was at $2438.70

In the premarket, the snapshot of the major indices trading modestly lower after yesterday’s gains.

• Dow Industrial Average futures are implying decline of -27 points. Yesterday, the index rose $431.63 or 1.03% at 42512.00
• S&P futures are implying a decline of -5.29 points. Yesterday, the index rose 40.91 or 0.71% at 5792.04
• Nasdaq futures are implying a decline of -21.61 points. Yesterday, the index rose 108.70 or 0.60% at 18291.62

Yesterday, the small-cap Russell 2000 rose 5.60 points or 0.26% at 2,2200.58

European stock indices are trading mixed:

• German DAX, +0.04%
• France CAC, -0.05%
• UK FTSE 100, -0.13% %
• Spain’s Ibex, -0.65%
• Italy’s FTSE MIB, +0.35% (delayed by 10 minutes)

Shares in Asian Pacific session China shares moved higher with China’s Shanghai index rebounding from yesterday’s sharp declines

• Japan’s Nikkei 225, +0.26%
• China’s Shanghai Composite Index, +1.33%
• Hong Kong’s Hang Seng index, +2.98
• Australia S&P/ASX index, +0.43%

Looking at the US debt market, yields are higher ahead of CPI data and the 30 year bond auction at 1 PM ET

• 2-year yield 4.053%, +3.7 basis points. At this time yesterday, the yield was at 3.965%
• 5-year yield 3.943%, +3.7 basis points. At this time yesterday, the yield was at 3.863%
• 10-year yield 4.092%, +2.5 basis points. At this time yesterday, the yield was at 4.037%
• 30-year yield 4.356%, +1.8 basis points. At this time yesterday, the yield was at 4.322%

Looking at the treasury yield curve is flatter versus this time yesterday

• The 2-10 year spread is at +3.8 basis points. At this time yesterday, the yield spread was +7.2 basis points.
• The 2-30 year spread is at +30.2 basis points. At this time yesterday, the yield spread was +35.7 basis points.

In the European debt market, the 10 year yields are down modestly

This article was written by Greg Michalowski at www.forexlive.com.