Forex News
- DJIA drops from its highest level since September 14 as bank shares slide.
- Trump expects an Iran deal right after the November 3 midterm election.
- The Fed's next rate decision is October 28, six days before the midterms.
The Dow Jones Industrial Average (DJIA) rose on Tuesday to its highest level since September 14 before the opening bell, then turned lower once trading started in New York. It trades near 51,800, below Monday's close. The NASDAQ Composite tested record highs and the S&P 500 is barely changed. Money is moving out of financial companies and into technology, and the Dow has more of the first in it and less of the second compared to the other two indexes.
The smaller bank counts for more in the Dow
Financial shares, from banks to brokers and insurers, are falling across the market. Traders are moving the money into technology on growing interest in artificial intelligence (AI) agents, apps that carry out tasks like booking travel. JPMorgan Chase (JPM), the biggest bank in the country, is falling with the rest. JPMorgan's own analysts raised their rating on Meta Platforms (META) earlier in September because of Meta's new agent, and Meta is one of the stocks the money is going into.
The Dow is calculated from share prices alone, so a $1 change in any of its 30 shares moves the index about 6 points, whatever the size of the company. A $10 fall is 1% of a $1,000 share and 10% of a $100 share, and it takes about 60 points off the Dow either way. The S&P 500 and the NASDAQ Composite are weighted by each company's total stock market value instead, so the biggest technology companies count the most there.
Goldman Sachs (GS) shares cost more than $900, among the most expensive in the Dow, and JPMorgan's cost less than $400. JPMorgan is worth more than three times as much, but a 1% fall in Goldman Sachs takes more than twice as many points off the index. Meta isn't in the Dow at all, which is how a day of selling banks and buying technology leaves the Dow lower and the NASDAQ Composite at a record.
Crude Oil keeps falling on a deal dated after the midterms
Crude Oil is down for a fifth session in a row. Brent, the international benchmark, reached its lowest level since September 8 on reports that Iran has offered to reopen the Strait of Hormuz within seven days. The offer depends on the United States lifting its blockade of Iranian ports, and it hasn't been independently confirmed. A cheaper barrel costs Chevron (CVX), the only energy producer in the Dow, and saves the other 29 money on fuel.
Trump told the United Nations General Assembly he must choose between a deal with Iran and wiping out the Islamic Republic. He expects a deal right after the November 3 midterms and said it would push Crude Oil below its prewar price. Crude Oil rose off its low after the speech, and on his timeline, the fall he promised in fuel costs for the other 29 comes after November 3. By his account, Iran is waiting on the result of an American election before it signs.
The Fed decides six days before the midterms
The Fed raised its main reference rate, what banks charge each other to borrow overnight, by a quarter-point to 3.75-4.00% on September 16. It was the first increase since July 2023, and higher fuel prices helped drive it. JPMorgan raised its prime rate, what it charges its most creditworthy borrowers, to 7.00% on September 17, so the increase went straight into what it charges for loans.
Most Fed officials expect at least one more increase before the end of the year, and the next decision is on October 28. Goldman Sachs makes less from lending and more from arranging takeovers and share sales, which are harder to pay for when borrowing costs rise. Another increase would do more for the bank that moves the Dow less.
Levels and bias
Resistance: The index went through the September 17 and Monday highs just above 52,100 before the open and fell back under them once trading started, which makes that area the first cap. Tuesday's high just above 52,400 is the highest since September 14 and the level the rally ended at.
Support: Tuesday's low just under 51,800 matches Monday's low just above 51,750, the second session in a row the index has stopped there. Below that are the September 18 low just under 51,500 and the September 16 low near 51,200, the lowest since June.
Bias: Bearish below 52,100. The first objective is the September 18 low just under 51,500, and the second is the September 16 low near 51,200. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, is near 22 and has fallen for two weeks without turning up. The bearish view fails on a daily close above 52,200.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- USD/CAD gains 0.27% on Tuesday and trades around 1.4070.
- Falling Oil prices weigh on the Canadian Dollar despite improving risk appetite.
- Hopes for the reopening of the Strait of Hormuz ease geopolitical concerns.
USD/CAD gains 0.27% on Tuesday and trades around 1.4070 at the time of writing, supported by weakness in the Canadian Dollar (CAD). Falling Oil prices offset the positive impact of improving risk appetite on the Loonie, as fresh prospects for negotiations over the Strait of Hormuz ease geopolitical concerns.
West Texas Intermediate (WTI) US Oil falls 0.46% on Tuesday to around $91.20 at the time of press. The decline acts as a headwind for the Canadian Dollar, as Canada is a major Oil producer and exporter. The relationship between energy prices and the Canadian currency therefore helps keep USD/CAD tilted to the upside.
US President Donald Trump, however, maintains a firm stance toward Tehran. Speaking at the United Nations (UN) General Assembly, he called on countries to maintain pressure on Iran and said Tehran will never obtain a nuclear weapon. He nevertheless expects the United States (US) and Iran to reach an agreement after the US elections.
On the policy side, the National Bank of Canada highlights that domestic conditions argue for patience from the Bank of Canada (BoC), stating that "in Canada, we’ve pulled tightening closer on our expected timeline, but still expect the BoC to be sidelined in October as economic momentum is threatened and slack remains."
In the United States, the US Dollar (USD) also benefits from a relatively supportive monetary policy backdrop. Boston Federal Reserve (Fed) President Susan Collins said on Tuesday that she supported last week's interest-rate hike and views a somewhat more restrictive monetary policy stance as appropriate to bring inflation sustainably back toward the Fed's 2% target.
Collins notes that upside risks to inflation have increased, while labor market conditions appear somewhat stronger. Her comments reinforce the view that the Fed has some room to maintain restrictive monetary policy to contain inflationary pressures, providing additional support to the US Dollar against the Canadian Dollar.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.27% | 0.30% | 0.08% | 0.28% | 0.27% | 0.02% | 0.07% | |
| EUR | -0.27% | 0.03% | -0.18% | 0.03% | -0.00% | -0.25% | -0.19% | |
| GBP | -0.30% | -0.03% | -0.25% | -0.04% | -0.06% | -0.28% | -0.22% | |
| JPY | -0.08% | 0.18% | 0.25% | 0.20% | 0.20% | -0.07% | 0.01% | |
| CAD | -0.28% | -0.03% | 0.04% | -0.20% | 0.00% | -0.25% | -0.18% | |
| AUD | -0.27% | 0.00% | 0.06% | -0.20% | 0.00% | -0.25% | -0.18% | |
| NZD | -0.02% | 0.25% | 0.28% | 0.07% | 0.25% | 0.25% | 0.08% | |
| CHF | -0.07% | 0.19% | 0.22% | -0.01% | 0.18% | 0.18% | -0.08% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
- Gold recovers from its intraday low as traders react to Iran’s proposal on reopening the Strait of Hormuz.
- Hawkish Federal Reserve expectations continue to cap the metal’s upside.
- Technically, XAU/USD remains trapped between the 50- and 100-day SMAs and the 200-day SMA.
Gold (XAU/USD) consolidates on Tuesday as traders weigh fresh Middle East headlines while the broader geopolitical backdrop remains tense. At the time of writing, XAU/USD trades around $4,328 after rebounding from an intraday low of $4,291 during European trading hours.
Iran has offered to reopen the Strait of Hormuz within seven days if the United States (US) lifts its blockade of Iranian ports and eases military pressure, Kyodo News reported earlier on Tuesday, citing a senior Iranian official. The proposal has reportedly already been conveyed to Washington through mediators.
Following the development, the US Dollar (USD) trims part of its earlier gains, helping Gold recover some ground, while Oil prices extend their decline for a fifth straight day. However, both the Greenback and Oil have recovered somewhat as traders assess remarks from US President Donald Trump at the UN, where he said the US could reach a deal with Iran after the November 3 midterm elections.
The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 100.60, just below the intraday high of 100.67, its highest level since July 30. Meanwhile, West Texas Intermediate (WTI) Oil trades near $90 and is still down more than 5% so far this week.
For Gold, however, the main headwind remains the hawkish Federal Reserve (Fed) policy outlook, which could limit a stronger recovery unless the Strait of Hormuz reopens and triggers a meaningful decline in Oil prices and inflation concerns. As a non-yielding asset, Gold tends to struggle when borrowing costs rise.
The Fed raised the federal funds rate by 25 basis points last week to 3.75%-4.00% as policymakers responded to stubborn inflation and elevated energy prices. 16 of 18 officials expect at least one more increase this year.
Analysts at ING note that gold "edged lower at the start of the week as investors assessed the implications of the Fed's first rate hike since 2023 and the prospect of further policy tightening." They highlight that comments from Fed officials have "reinforced concerns that inflation remains elevated," in turn "supporting expectations that rates will stay higher for longer." ING acknowledges that "tighter monetary policy remains a headwind for bullion," but points out that "ETF holdings are sitting at a six-month high, and continued central bank buying should help limit downside."
Technical analysis: XAU/USD steadies above 50-day and 100-day SMAs
On the daily chart, XAU/USD holds above the 50-day and 100-day Simple Moving Averages (SMAs) at $4,301 and $4,316, respectively, while remaining below the 200-day SMA at $4,541. This setup keeps the near-term bias broadly neutral, with Gold caught between nearby trend support and longer-term resistance.
Momentum indicators also point to a range-bound setup. The Relative Strength Index (RSI) at 47 stays close to the neutral 50 mark, while the Moving Average Convergence Divergence (MACD) remains in negative territory. However, the fading red histogram bars suggest bearish momentum is losing strength.
On the downside, the 100-day SMA at $4,316 and the 50-day SMA at $4,301 form a key support zone. A break below this area could expose $4,150 and the psychological $4,000 mark.
On the topside, the 200-day SMA at $4,541 acts as the key resistance, followed by the $4,700 level. A sustained break above these barriers would be needed to strengthen the bullish outlook.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
TD Securities’ Ryan McKay and Bart Melek highlight that elevated speculative positioning leaves Crude Oil vulnerable to shifting headlines around Middle East supply routes. They note reports about Iran potentially opening the Strait and Saudi testing East-West pipeline flows, which are weighing on prices. The authors describe current energy market dynamics as a double-edged sword for both crude and refined products.
Spec positioning heightens headline risk
"Crude is prone to headlines amid elevated spec positions. Headlines are in full force this morning, with reports that Iran would open the Strait within 7 days if their demands are met by the US. These headlines have already been refuted by Iran."
"Further, Saudi are running tests to resume East-West pipeline flows and reportedly notified Asian buyers they will soon be able to pick up from Yanbu."
"All of this is weighing heavy on crude oil prices today, but as always regarding deal making headlines, we remain skeptical until there is actually something concrete."
"The elevated flows through the Strait point to a loss of Iranian leverage, which suggests they could be more open to making a deal than previously, but it also increases the probability of escalation in an attempt to reassert control."
"We continue to see the current state of the energy market as a double-edged sword, as either increased refiner runs ease product market tightness but re-tighten crude, or the crude rally succumbs to increased flows without increased refiner uptake, leaving product markets to continue higher until demand destruction is found."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/JPY trades sideways on Tuesday despite a broadly stronger US Dollar.
- Technically, the pair remains capped below a cluster of key moving averages on the daily chart.
- Momentum has improved, but a clear break above the 158.44-159.53 resistance zone is needed to strengthen the upside.
USD/JPY trades flat on Tuesday as the Japanese Yen (JPY) holds firm in thin holiday trading during Japan’s Silver Week. However, a broadly stronger US Dollar (USD) keeps the Yen’s gains in check. At the time of writing, USD/JPY trades around 157.46.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 100.60, near levels last seen in late July, supported by expectations of further Federal Reserve (Fed) interest rate hikes. Traders are also closely watching Middle East developments after remarks from US President Donald Trump at the UN offered little sign that tensions could ease anytime soon.
Yen steadies as BoJ rate check tempers USD/JPY upside
Analysts at MUFG note that the Yen “initially weakened sharply after the BoJ’s latest policy update on Friday,” with USD/JPY “hitting a high of 158.05” before dropping back towards 157.00. They highlight that the trigger for the late-Friday rebound was “reports that the BoJ had conducted a rate check during the New York trading session,” which sent “a clear signal that they are prepared to intervene again if the yen continues to weaken.”
MUFG argues that the “rate check should help to dampen market expectations for how much the yen will be allowed to weaken in the near-term as USD/JPY moves closer to the 160.00-level.” Looking ahead, the bank believes that the BoJ’s “new phase” for monetary policy is “consistent with a rate hike every three months,” although they caution that “the combination of higher energy prices and widening yield spreads is making it more difficult for Japanese policymakers to prevent a weaker yen, and increasing pressure to intervene again to buy more time.”
Technical analysis
From a technical perspective, USD/JPY has recovered most of the sharp decline seen at the start of the month, when the pair fell from near 160 to 153. However, the recovery remains capped by a cluster of key moving averages on the daily chart.
Despite this heavy overhead structure, momentum has improved, with the Relative Strength Index hovering around 52 and the Moving Average Convergence Divergence (MACD) turning positive, which hints at fading downside pressure but not yet at a clear bullish reversal.
On the topside, initial resistance is seen at the 200-day SMA at 158.44, followed by the 50-day SMA at 158.86 and the 100-day SMA at 159.53. The psychological 160 mark acts as the next key barrier. A sustained break above this level could expose 164, near the 40-year high touched in late July.
On the downside, initial support is seen near 155.50, followed by 153. A clear move above the moving-average cluster would be needed to strengthen the bullish outlook.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.24% | 0.23% | 0.03% | 0.23% | 0.21% | -0.03% | 0.03% | |
| EUR | -0.24% | -0.02% | -0.20% | -0.00% | -0.03% | -0.28% | -0.20% | |
| GBP | -0.23% | 0.02% | -0.21% | -0.01% | -0.02% | -0.27% | -0.18% | |
| JPY | -0.03% | 0.20% | 0.21% | 0.19% | 0.18% | -0.10% | 0.02% | |
| CAD | -0.23% | 0.00% | 0.01% | -0.19% | -0.01% | -0.27% | -0.17% | |
| AUD | -0.21% | 0.03% | 0.02% | -0.18% | 0.01% | -0.26% | -0.16% | |
| NZD | 0.03% | 0.28% | 0.27% | 0.10% | 0.27% | 0.26% | 0.10% | |
| CHF | -0.03% | 0.20% | 0.18% | -0.02% | 0.17% | 0.16% | -0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
US President Donald Trump said at the UN General Assembly that “we must be united in maintaining pressure on Iran,” adding that he believes that the US and Iran will strike a deal following the US midterm elections in November.
Trump added that more Oil is flowing through the Strait of Hormuz since the war started, that the US should maintain pressure on Iran, and that Tehran “will never have a nuclear weapon.”
Key highlights:
I urge Iran to make a deali urge Iran to make a deal
More oil is flowing than at any point since the war started
We must be united in maintaining pressure on Iran
I have a decision to make on Iran
I believe we'll make deal with Iran right after US election
Iran will never have a nuclear weapon
Calls on all nations to economically isolate Iran
Iran's regime is weak and desperate
Big changes can happen fast
Cuba is a failed state, freedom will be coming to Cuba
US secretary of state rubio is deep into negotiations with Cuba
We will build two major military bases in Greenland
Will sign Greenland agreement later today
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.20% | 0.17% | -0.05% | 0.21% | 0.19% | -0.12% | -0.05% | |
| EUR | -0.20% | -0.04% | -0.23% | 0.02% | -0.01% | -0.31% | -0.24% | |
| GBP | -0.17% | 0.04% | -0.23% | 0.03% | 0.02% | -0.28% | -0.20% | |
| JPY | 0.05% | 0.23% | 0.23% | 0.27% | 0.25% | -0.08% | 0.02% | |
| CAD | -0.21% | -0.02% | -0.03% | -0.27% | -0.01% | -0.32% | -0.24% | |
| AUD | -0.19% | 0.00% | -0.02% | -0.25% | 0.01% | -0.31% | -0.22% | |
| NZD | 0.12% | 0.31% | 0.28% | 0.08% | 0.32% | 0.31% | 0.09% | |
| CHF | 0.05% | 0.24% | 0.20% | -0.02% | 0.24% | 0.22% | -0.09% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
National Bank of Canada's Ethan Currie notes that while oil-driven inflation risks have increased, the Bank of Canada is likely to remain on hold in October as domestic slack and trade uncertainty continue to weigh on the economic outlook. Although markets have brought forward expectations for policy tightening, with OIS pricing around four BoC hikes by June 2026, Currie argues that the path may be somewhat overstated relative to underlying fundamentals. Policymakers remain focused on preventing second-round inflation effects, but the timing and pace of rate hikes will depend on how growth and inflation risks evolve.
Tightening pulled forward but still cautious
"In Canada, we’ve pulled tightening closer on our expected timeline, but still expect the BoC to be sidelined in October as economic momentum is threatened and slack remains."
"Since the March rates selloff, a tightening bias has lingered across most advanced economies, though unevenly. In Canada, slack and trade uncertainty have pushed expected hikes further out—aside from a brief reversal after Macklem’s hawkish September presser."
"Despite market volatility, policymakers have been consistent—a lingering supply shock threatens second-round effects on inflation. As such, CB pricing has been closely tied to crude (even if that relationship faded this summer for the Fed). ~300 bps of tightening from the Fed, BoC, ECB, and BoE over the next ~9 months is expected—slightly overextended for the Fed and BoC, in our view."
"For Banks yet to deliver a hike, the messaging is clear—inflation risks are paramount—and markets have appropriately priced in eventual action."
"Note: For example, OIS imply ~4 hikes from the BoC by Jun-26."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
TD Securities economists Oscar Munoz and Eli Nir provide an early projection for United States (US) September Consumer Price Index (CPI , expecting Headline CPI to rise 0.54% m/m, driven mainly by an almost 8% jump in gasoline and firmer food prices. They see Core CPI slowing to 0.20% m/m, with services inflation mean-reverting and supercore easing after August’s surge.
Headline and core inflation projections
"Following the release of the August CPI report, we are providing an early look into our September projection based on multiple assumptions which may evolve as the month progresses and more data becomes available — particularly for volatile segments like gasoline prices, hotel rates, and airfares."
"Headline inflation is expected to gain additional strength in September rising 0.54% m/ m after increasing at an also strong 0.40% m/m in August (CPI NSA index: 336.510 vs the market's current fixing at 336.600). A close to 8% m/m increase in gasoline prices will act as the key culprit, with food inflation likely also accelerating."
"Our preliminary forecast for the September core CPI stands at 0.20% m/m (down from a firmer 0.29% in August), which would be consistent with a core PCE increase at 0.25%."
"Core goods prices likely increased modestly again with tariff-exposed categories moving largely sideways. Additional strength in both new and used vehicle prices is expected to boost goods inflation."
"Services inflation is projected to mean-revert following last month's telephone-services driven surge. Shelter likely saw some cooling on the back of another subdued rise in OER and hotel rates inflation losing speed at the margin. Medical care services and still-firm airfares are also expected to lift inflation in the segment."
"All of this should result in supercore CPI inflation slowing to a more manageable 0.23% m/m in September after unexpectedly surging to 0.51% in August."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Norman Liebke at Commerzbank argues that European gas prices may see only limited further declines despite a brief 8% drop on US–Iran diplomatic headlines. With the Strait of Hormuz officially closed, Qatari LNG flows remain at just 20% of pre-war levels, Asian prices are elevated, and European storage is well below average, raising the risk of emergency purchases and renewed price spikes.
LNG constraints and low storage
"Following news that US President Trump will speak with Iranian President Pezeshkian at today’s UN General Assembly, the gas price temporarily fell by more than 8%. However, downward pressure is likely to remain limited."
"As long as the Strait of Hormuz remains officially closed, only a small portion of Qatari LNG is reaching the global market. According to Bloomberg data, it currently stands at 20% of pre-war levels."
"Once the difference reaches EUR 6 per MWh, it becomes more attractive for US suppliers to ship their LNG to Asia instead of Europe due to the additional transportation costs. Since Europe is increasingly relying on LNG supplies in the winter due to low gas storage levels and as we approach the heating season, the price gap is unlikely to widen much further in order to prevent the diversion of LNG shipments."
"On average, these are now 70% full, which is about 15 percentage points below the five-year average. In Germany, however, gas storage facilities are filled to just under 57% (27.5 percentage points below the five-year average), which is why the federal government could discuss emergency purchases with Trading Hub Europe, the market area operator, this week and then, if necessary, authorize them. Should these purchases take place on a larger scale, the gas price could then rise more sharply again."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Scotiabank strategists Shaun Osborne and Eric Theoret note that the Canadian Dollar (CAD) is largely unchanged, with Governor Macklem’s comments leaving the Bank of Canada (BoC) outlook broadly consistent with the latest policy statement. The door to tighter policy remains open, and policymakers may be more sensitive to CAD weakness with inflation near 3%. Technicals point to further USD/CAD gains.
CAD steady as USDCAD tests resistance
"BoC Governor Macklem’s comments yesterday did not advance the interest rate debate to any degree. His remarks were broadly consistent with the tone of the latest policy statement which balanced trade tensions against sticky price pressures."
"The door to tighter policy remains open but we may have to wait for the October policy decision to get a clearer sense of the rate outlook. A lower CAD will add to inflation risk at the margin. CAD losses since early September have not been all that significant and the Bank generally views the FX pass through (to inflation) as lagging and limited."
"But policymakers may be a little more sensitive to the CAD trend with inflation stuck around 3% than if CPI was 2%. Meanwhile, President Trump’s apparent deal with Belarus to import potash is unlikely to go anywhere anytime soon simply because Belarus has no spare export capacity currently."
"Bullish—Clear USD progress through 1.3990 resistance, the 50% Fibonacci retracement of its June-August decline, keeps USD/CAD on track for 1.4050 and potentially 1.4125 in the short term (61.8% and 76.4% retracements respectively)."
"USD strength is supported by bullish intraday and daily trend oscillators. Initial USD support is located at 1.3900-1.3915."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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