Greenback Is Bid

The US dollar is stronger against all the G10 currencies and most emerging market currencies today. The euro has approached $1.14, despite firmer than expected preliminary September PMI. Japan’s markets re-open tomorrow for the first time this week, and the market has taken the dollar to almost JPY158, around where it peaked before last weekend. Optimism about supply and talks has kept November WTI mostly consolidating today below $90 a barrel.  Yet, interest rates are little changed. 

The Trump-Xi summit is drawing much attention, but expectations seem relatively low.  At most a short extension of the tariff truce may be seen but the current agreement doesn’t end until early November, so there is ostensibly no urgency.  The central banks of Switzerland, Norway, and Sweden meet tomorrow. There has been a shift in recent days today a Norges Bank hike tomorrow. A week ago, the swaps market had a little less than a 50% chance of a hike discounted, and now it is a little more than a 50% chance. 

Prices 

G10

• The euro’s losses were extended to $1.1430 yesterday and to slightly above $1.1405 today, a new low since late July.  Options for 1.8 bln euros struck at $1.14 expire today. The $1.1400 area also holds the trend line drawn off the late June and late July lows. A break could signal a test on the $1.1350 area next.  

• The dollar traded in about a yen range yesterday below JPY157.80.  The high last Friday before claims that the BOJ checked rates circulated and spooked the market, the greenback briefly traded slightly above JPY158.  The dollar has edged a little higher today to approach JPY158. Above there, resistance is seen in the JPY158.20 area and the 200-day moving average is near JPY158.45. 

• Sterling was sold to almost $1.3320 yesterday and took another step down today and has slipped through $1.3280. which, like the euro, is the lowest since July 29. Options for almost GBP500 mln at $1.3315 expire today and may have contributed to some of the selling pressure. The sell-off does not appear exhausted, and the $1.3265-75 area is the next technical target.   

• The Canadian dollar’s slump continues. It is at its lowest level since late July. The greenback rose slightly above the early August high (~CAD1.4080) yesterday and reached slightly above CAD1.4090 today. The US two-year premium over Canada rose by nearly four basis points approach 150 bp, the widest since March 2025, which itself was the most mid-1997.  The next chart area of note is in the CAD1.4100-30 area. 

• The Australian dollar traded below $0.7100 in local markets yesterday, and again in Europe, and then in North America.  The dip was bought each time, but the Aussie recorded lower highs in each rebound. Today, the Australian dollar has fallen to $0.7080. Last week’s low was about $0.7075. A convincing break targets the $0.7045 area. Options for A$715 mln at $0.7050 expire today. The futures market has a little more than an 85% chance of an RBA hike next week and a 50% chance of another one before the end of the year.  That seems a bit rich and the market may be forced to re-consider on any disappointment with tomorrow’s employment report. 

EM 

• Long Mexican peso positions continue to get squeezed out. The greenback reached MXN17.3165 yesterday. Follow-through dollar buying today has seen the greenback rise to almost MXN17.40, its best level since late July. The US dollar has not traded above the 200-day moving average since April 2025. It is found near MXN17.42 today. The momentum indicators are getting stretched but they do not preclude a a move toward MXN17.55 on a break above MXN17.42. 

• The dollar rose for the first time in four sessions against the offshore yuan yesterday. It was the first time in five sessions that the greenback did not trade below the previous session’s low. It reached a four-day high in Europe, near CNH6.7090. The 20-day moving average is a little above CNH6.71. The dollar has not settled above it since July 9. The PBOC fixed the dollar higher today for the first time in 11 sessions (CNY6.7468 vs. CNY6.7459 yesterday).  

• The Indian rupee fell for the first time in six sessions today.  The dollar opened lower (~INR95.5675) but recovered as the session progressed and settled near its highs.  S&P and Fitch lifted FY27 growth to 7.0% and 6.9%, respectively, and anticipate at least one hike in the current fiscal year.  The Asian Development Bank also lift its growth forecast (7% vs. 6.6% projection in July). 

Other Markets

• Equities are mixed today. In the Asia Pacific regions, China, Hong Kong, and Singapore fell, while Taiwan, South Korea, Australia, and India rose, though the bourses finished well off their highs. Europe’s Stoxx 600 is off by around 0.2%, in what could be the first loss of the week.  US index futures are narrowly mixed. 

• Benchmark 10-year yields are narrowly mixed in Europe. The 10-year Gilt yield is off a little more than a basis point. The 10-year US Treasury yield is nearly flat, slightly below 4.96%. 

• Gold recovered from a three-day low, a little below $4295 yesterday and returned to the $4360 area in the North American afternoon. It is trading inside yesterday’s range with a heavier bias today. Silver similarly was sold to a three-day low (slightly below $64.60) and recovered to settle above Monday’s high (~$67.05). The outside up day has seen no follow through buying, and silver is languishing in the lower end of yesterday’s range. 

• November WTI fell for the fifth consecutive session yesterday. It settled at $100.75 on September 15 and closed near $90.50 yesterday. It settled below the 20-day moving average (~$90.55) for the first time since August 7. It is trading quietly unable to trade much above yesterday’s close but also holding above yesterday’s low (~$88.65). 

Data

• US preliminary PMI may soften a little. The manufacturing PMI has been steady at 53.9 for the past three months.  The services PMI rose for the past three months—from 50.7 in May to 56.5 in August.  The composite also has increased for three months through August.  It stands at 56.0 compared with 52.7 at the end of last year. 

• The eurozone flash September PMI was firmer than expected. The manufacturing PMI was steady at 52.7. It has not declined since June. The services PMI rose to 53.0 from 51.6. It is a new high since last November. The services PMI finished last year at 52.4. The composite PMI reached 53.1 from 52.0, where it was in July and August. It ended last year at 51.5. 

• The UK’s preliminary PMI was mixed. The manufacturing rose to 52.0 from 51.7. The services PMI slipped to 51.7 from 52.5, as did the composite PMI. The composite was at 51.4 at the end of last year.

• Australia’s PMI disappointed. The manufacturing PMI fell to 49.3 from 52.0. It was the first sub-50 reading since March. The services PMI eased for the second consecutive month.  It stands at 51.4, down from 53.2 in August and 53.6 in July.  The composite also slipped for the second consecutive month. It is at 50.8, down from 52.7 in August and 53.2 in July. It was at 51.0 at the end of 2025.