The voting members of the U.S. Federal Reserve were still split over the necessity of hiking the key rate as soon as September during the last FOMC meeting that took place last July 28 and 29. The odds of an increase being announced at the next meeting are now at 38%. The labour market is still below its full potential and the strong greenback, combined with the collapse in energy prices, have reduced inflationary risks. The CPI data that was released yesterday and which came in below forecasts confirmed this point. These factors were positive for the bond market, but the higher-than-expected crude inventory levels continued to weigh down on crude oil prices, which fell by 4.3%. It looks like it will be another difficult day on North-American markets, as Asian and European markets are pulling back markedly. The loonie is falling against the greenback and the euro and bond yields are falling. In economic news, we are awaiting the release of Initial Jobless Claims at 8:30 and we will have USD Philadelphia Fed figures, Leading Indicators and Existing Homes Sales all at 10 a.m. A lot of volatility is to be expected!
- Range of the day: 1.3080-1.3200
Emmanuel Tessier-Fleury