US equities remained elevated, the S&P500 up 0.1% currently. The US dollar fell, while bond yields rose amid some hawkish Fedspeak. US 2yr treasury yields rose from 0.42% to 0.45%, while the 10yr yield rose from 1.46% to 1.50%. Markets are fully pricing the first Fed funds rate hike to be in September 2022. Australian 3yr government bond yields (futures) rose from 1.05% to 1.07%, while the 10yr yield rose from 1.77% to 1.81%. Markets are fully pricing the first RBA rate hike to be in July 2022.
Commodities, Brent crude oil futures rose 0.6% to $83, copper rose 1.5%, gold rose 0.4%, and iron ore fell 0.2% to $94.
Overnight Currency Range
AUD/USD 0.7385 0.7431
EUR/USD 1.1550 1.1595
GBP/USD 1.3451 1.3580
USD/JPY 113.08 113.67
NZD/USD 0.7101 0.7176
USD/CAD 1.2437 1.2465
USD/CNH 6.3870 6.3989
AUD/JPY 83.86 84.13
AUD/NZD 1.0336 1.0410
Likely a quieter day ahead with Australia's Business Survey for October unlikely to move markets too much. UD/USD traded in a tight 0.7385/.7431 range to start the week and for now appears comfortable in this region. Further demand can be expected ahead of last week’s lows of 0.7360 while offering interest is staggered to 0.7500.
Event Risk Data Today
Aust: The October NAB business survey should receive support from NSW and Vic emerging from lockdown.
NZ: Card spending should see a strong result despite demand being held back by some lingering restrictions (market f/c: 15%).
Japan: September’s current account surplus has narrowed over the course of 2021 (market f/c: 1052.3bn).
China: New loans for October should highlight the free availability of credit to good quality borrowers, but also headwinds for demand. M2 money supply growth is expected to be unchanged in the month (market f/c: 8.3%yr). Note, releases are due 9-15 November.
Europe: The ZEW survey of expectations has dropped to average levels in recent months; a similar result is expected in November.
US: The October NFIB optimism survey should point to small businesses remaining optimistic on the outlook despite facing significant challenges from delta and the restricted supply of labour and other inputs (market f/c: 99.5). The PPI is meanwhile expected to signal continued upstream price pressures (market f/c: 0.6%). FOMC Chair Powell will speak at a joint Fed, ECB and BoE Diversity Conference. The FOMC’s Bullard and ECB’s Knot will be on a UBS Panel, while the FOMC’s Daly and Kashkari will also speak at other events.