Home Daily Commentaries Focus back on rate hikes with Producer Prices and FOMC minutes

Focus back on rate hikes with Producer Prices and FOMC minutes

Daily Currency Update

Markets are in a holding pattern this morning with the focus squarely on inflation.  In the lens today is the US Producer Price Index which came in at 8.5% year over year with a core number at 7.2%.  Later today, we have the release of the minutes from the last FOMC meeting.  Investors will be interested to see any clues to where the Fed thinks inflation will peak.  There is some indication this has already happened. The PPI index has not continued to rise, and pressures are seemingly waning on the supply chain globally.

Key Movers

The Euro is staying steady this morning but could be facing headwinds soon.  The European currency is trading relatively the same as yesterday versus the USD.  Concerns are coming out though about the ability to provide energy to the continent heading into winter.  Energy ministers are meeting in Prague to discuss finding alternate supplies of natural gas now that the Nordstream pipeline has been shut off by Russia.

The GBP is regaining yesterday’s losses although the focus in the UK is not on the currency but on the government bonds, or “GILTS”.  The Bank of England Governor Andrew Bailey warned this morning that the current gilt-buying program is up on Friday and that investors only have 3 days to get involved.

The Canadian dollar remains relatively unchanged to its American counterpart this morning, trading in the same range we saw on Tuesday.  The trim off in US stocks overnight and WTI oil falling to $87 a barrel is weighing on the CAD as most risk positive assets are underperforming in current conditions.  With a significant lack of any real data this week, the Canadian dollar will be moving more based on general market pressures than any specific Canadian information.

Expected Ranges

  • EUR/USD: 0.9675 - 0.9773 ▼
  • GBP/USD: 1.0927 - 1.1172 ▼
  • AUD/USD: 0.6242 - 0.6341 ▼
  • USD/CAD: 1.3719 - 1.3826 ▲