Key US CPI data on Thursday.
Chicago Fed President Evans stated that much higher rates will bring the Fed’s employment mandate into jeopardy and saw benefits in adjusting the pace of rate hikes soon.
Minneapolis head Kashkari stated that he did not know what the decision would be in December. He added that he wanted to see how the economy evolves to reduce the risk of overshooting, but he also commented that it was entirely premature to talk of a policy pivot.
According to Kashkari the Fed is a long way from the two mandates being in tension.
US Treasuries posted limited net gains on Wednesday and the trend continued in Asia on Thursday with the 10-year yield retreating to around 4.07%. Equities were unable to gain support from lower yields and posted net losses.
In an announcement on Wednesday, Russia announced that it will withdraw from Kherson City and regroup on the Eastern bank of the Dnipro River.
The Euro spiked higher on the report, but failed to hold the gains with a significant net retreat on the day as the dollar regained ground.
The latest US consumer prices data will be released on Thursday. Consensus forecasts are that the prices will increase 0.6% for the month with the year-on-year rate slowing to 8.0% from 8.2%.
Underlying prices are expected to increase 0.5% with the annual rate marginally lower at 6.5% from 6.6%.
After the rout on Wednesday, cryptocurrencies attempted to recover on Thursday, but selling pressure resumed quickly and bitcoin dipped to fresh 2-year lows following a collapse of Binance’s takeover of FTX operations.
The headline Norwegian inflation rate increased to 7.5% for October from 6.9% and above expectations of 7.1%
The core rate also increased sharply to 5.9% from 5.3%.
The Euro was unable to gain sustained support on Thursday despite the spike on the Kherson news. The dollar also regained ground amid a less confident risk tone.
The US currency was resilient despite a dip in US yields with a covering of shorts after the mid-term election and ahead of the CPI data. EUR/USD dipped to lows near 1.0010 before stabilising around 1.0025 on Thursday.
USD/JPY retreated from highs as US yields retreated and equities moved lower. Bank of Japan Governor Kuroda maintained a dovish stance, but reiterated he would not serve beyond April 2023. USD/JPY retreated to near 146.00 from 146.60 highs before stabilising.
The Swiss franc recovered ground amid a more fragile risk tone and cryptocurrency losses. EUR/CHF retreated to 0.9870 with USD/CHF settling just below 0.9850.
Sterling came under sustained pressure amid a lack of confidence in UK fundamentals. Weaker risk conditions also exposed Sterling to selling pressure. GBP/USD slumped to lows near 1.1350 and failed to hold a recovery to above 1.1400 on Thursday.
Commodity currencies retreated amid weaker equities and a stronger US dollar. AUD/USD retreated to 0.6435 on Wednesday. RBA Deputy Governor Bullock stated that rates may need to rise further, but getting closer to a pause.
AUD/USD retreated to just below 0.6420. USD/CAD settled with significant net gains to 1.3535 as oil prices lost ground. The higher-than-expected inflation data failed to support the krone with EUR/NOK strengthening to around 10.42.
|13:30||US CPI m/m||0.60%||0.40%|
|13:30||US CPI y/y||7.90%||8.20%|
|13:30||US Core CPI m/m||0.50%||0.60%|