**United States**
The US dollar is experiencing minimal changes today. Despite stronger-than-expected US auto sales, the Atlanta Fed GDP tracker decreased to 2.5% from 3.1% following weaker construction spending and manufacturing ISM. The threat of escalating conflict between Israel and Iran is tempering risk appetites. US index futures continue to trade with a downward bias. The 10-year US Treasury yield has risen by three basis points to 3.76%. Gold is slightly softer, consolidating around $1,650, while oil remains firm with November WTI nearing $72 a barrel. The upcoming ADP private sector job estimate is highly anticipated, as it closely aligns with BLS estimates of private sector job growth. A strong ADP reading could potentially dampen market speculation of a 50 basis point cut in November.
**Eurozone**
The labor market in the eurozone remains impressively resilient, with the unemployment rate unchanged at a record low of 6.4% in August. Despite this strength, an ECB rate cut later this month is not ruled out, as the central bank’s focus is on the quicker-than-expected decline in inflation pressures. The euro, unable to maintain levels above $1.12, succumbed to pressure as its US two-year premium over Germany continues to weigh. The surge in oil prices amid geopolitical tensions is driving risk aversion, keeping the euro trading around $1.1070. The charts suggest potential for a test at $1.10.
**United Kingdom**
Sterling suffered a notable decline yesterday, dropping about 0.7%, marking its largest fall in two months. It breached the $1.3300-15 support area and is now testing the $1.3220-30 support zone, which includes mid-September congestion, the 20-day moving average, and the 50% retracement of its recent gains. Today, sterling is trading in a narrow range between $1.3260 and $1.3305.
**China**
The Chinese yuan is showing some resistance against the US dollar, which approached the CNH7.0360-80 resistance area yesterday. Despite this, traders seem hesitant to push the dollar much further, as it remains near where the mainland market closed on September 30. China’s economic stimulus continues to support the Australian dollar, highlighting the interconnectedness of their economies.
**Japan**
Japan’s new Prime Minister Ishida has formed a cabinet filled with experienced LDP members, signaling a likely traditional governing course. A sharp 3.3% drop in August industrial output threatens Q3 growth forecasts. Meanwhile, BOJ Governor Ueda’s comments suggest no urgency for a rate hike due to global economic uncertainties, aiding the yen’s depreciation. The dollar has reached JPY144.40, with $2 billion in options expiring soon at JPY145, though a rise in US yields ahead of Friday’s jobs report might not support such a move.
**Canada**
The Canadian dollar held steady against the US dollar yesterday, despite broad gains for the greenback. The US dollar remains within a tight range of CAD1.3475 to CAD1.3500 today. While options for $970 million at CAD1.3550 expire shortly, there is more likelihood of the Bank of Canada cutting rates by 50 basis points later this month than the Federal Reserve doing so in November.
**Australia**
In Australia, the local economy continues to hinge on China’s growth prospects. Australia’s trade surplus has diminished by over 40% compared to the same period last year, with August trade figures expected tomorrow. The Australian dollar’s recent pullback was mild, and it is supported by the ongoing China-stimulus narrative. It is trading within yesterday’s range, from $0.6875 to $0.6915, with China being a crucial factor in commodity demand.
**Mexico**
The Mexican peso proved resilient following reassuring comments from the new president at her inauguration, which calmed investor nerves. Despite markets being closed for the inauguration, the dollar reached a two-and-a-half-week high against the peso near MXN19.83 before reversing to close lower. It has continued its decline to MXN19.55 today, with support seen in the MXN19.45-50 range.
