- After a mostly mixed session on Wall Street, US indices futures are trading down again today. The US100, US30 and US500 are losing in the range of 0.5%, and the US2000 is trading near a 0.9% sell-off, following a weak session in Asia and a strong strengthening of the yen.
- Today, the focus will be on the US CPI reading for August (1:30 PM BST). The Nikkei and Hang Seng indices lost close to 1.5%, and the USDJPY pair settled more than 1% below 141, after the Bank of Japan’s Nakagawa conveyed that the bank will raise rates if current positive economic conditions persist, essentially reiterating Kazuo Ueda’s stance.
- The pair fell below the local lows of the August 5 panic and may cause further unwinding of the ‘carry trade’ in global markets. Nakagawa also referred to the situation in the real estate market, stressing that it could prompt the BoJ rate hikes faster, possibly later this year.
- Mizuho Securities pointed out that the U.S. election could put additional pressure on the pair, while a drop in Trump’s chances of winning could be perceived as negative for the dollar, due to the lower chances of extreme tariffs, which Harris does not support
- According to Predictlt, Kamala Harris’s chances of winning the election rose to 55%, during the debate with Donald Trump.
- Polymarket also priced the increase in the chances of winning by 3 percentage points, now, spreading the chance equally, for both candidates.
- During the debate, Trump emphasized his promised tax cuts for major corporations and the wealthy; Harris proposed lower taxes for the ‘middle class’
- Oil loses less than 0.2% after yesterday’s more than 4% sell-off, volatility on NATGAS is very low. Agricultural commodity futures are mostly posting slight gains.
- US API Crude Oil inventories came in -2.79M vs 0.7M exp. and -7.4M previously; gasoline inventories according to API dropped by -0.51M vs -0.3M previously
- European index futures on the DE40, UK100 and EU50, among others, are trading down in the 0.3 – 0.4% range after a weak session in Asia. Traders prepare for US CPI inflation data, for August
- A weaker reading could lead markets to increase concerns about demand and recession, while an increase in price pressures could be perceived as risky and prompt the Fed to loosen policy very cautiously, despite a slowing labor market
- Precious metals are posting very modest gains, while yesterday’s session saw a downward trend in industrial metals; particularly copper and aluminum, following China’s weaker trade balance
- Cryptocurrencies reacted negatively to market weakness in Asia and the implied increase in Harris’ chances of winning the election.
- Bitcoin loses more than 2% and slides to $56k; most altcoins record declines
- After the CPI data from the US, the market will likely turn its attention to PPI data from Japan, on Thursday, and industrial production on Friday – the readings could raise volatility on USDJPY, and strong readings have the potential to pull the pair below 140
- South Korea’s KOSPI also declined, after the August unemployment rate fell to 2.4% from 2.5% forecast, strengthening the South Korean won. Declines in the large Japanese stock market were led by Nissan, which posted a nearly 3% retreat
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