<ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/canada-august-employment-397k-vs-150k-expected-20220909/“>Canada August employment -39.7K vs +15.0K expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-waller-says-he-supports-another-signficant-hike-this-month-20220909/“>Fed’s Waller says he supports ‚another signficant hike‘ this month</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-george-says-she-prefers-steadiness-and-purposefulness-of-rate-hikes-over-speed-20220909/“>Fed’s George says she prefers steadiness and purposefulness of rate hikes over speed</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/more-from-fed-wallers-we-do-not-want-inflation-expectations-to-get-on-anchored-20220909/“>More from Waller/George: We do not want inflation expectations to get unanchored</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecb-likelier-to-hike-by-50-bps-than-75-in-october-sources-report-20220909/“>ECB likelier to hike by 50 bps than 75 in October – sources report</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/bofa-now-sees-75-bps-fed-cut-expects-headlines-cpi-to-fall-in-august-20220909/“>BofA now sees 75 bps Fed hike, expects headlines CPI to fall in August</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/baker-hughes-us-oil-rig-count-591-vs-596-last-week-20220909/“>Baker Hughes US oil rig count 591 vs. 596 last week</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/atlanta-fed-gdpnow-estimate-falls-to-13-from-14-on-september-7-20220909/“>Atlanta Fed GDPNow estimate falls to 1.3% from 1.4% on September 7</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-wholesale-sales-for-july-14-vs-14-estimate-20220909/“>US wholesale sales for July -1.4% vs. 1.4% estimate</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/video-why-this-could-be-the-bottom-in-europe-20220909/“>Video: Why this could be the bottom in Europe</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/canada-capacity-utilization-for-q2-838-vs-820-last-quarter-20220909/“>Canada capacity utilization for Q2 83.8% vs. 82.0% last quarter</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/heads-up-boe-postpones-september-policy-meeting-by-one-week-20220909/“>Heads up: BOE postpones September policy meeting by one week</a></li></ul><p>Markets:</p><ul><li>S&P 500 up 61 points, or 1.5%, to 4067</li><li>US 10-year yields up 2.5 bps to 3.31%</li><li>WTI crude oil up $2.78 to $86.32</li><li>Gold up $8 to $1715</li><li>AUD leads, USD lags</li></ul><p>The economic highlight was the Canadian jobs report and for the second month, it stumbled. That may begin to give the Bank of Canada pause on its aggressive hiking path but it didn’t hurt the loonie too badly as oil gained and the US dollar stumbled broadly. USD/CAD rose to 1.3050 from 1.3000 on the report but finished halfway in between.</p><p>The peak of today’s USD weakness came late in Asia but there was a modest turn from there as USD/JPY rebounded from a low of 141.51 to 142.69. There are many people talking about a dollar top and with Europe trying to solve the energy crisis, there’s some scope there. But USD/JPY remains the main event this year and aside from some jawboning, the BOJ hasn’t budged.</p><p>In FX, US trading was choppy and generally sideways but that wasn’t the case in equities as the Nasdaq led a rally. That led to the first gain in five weeks and it was a hefty one at 4.1%.</p><p>Eyes are on next week’s CPI and the possibilty of a negative headline. The Fed has essentially pushed it aside as a decided for the Sept 21 FOMC but a low reading could tee up a less-hawkish statement. What market participants are wondering about are the balance between headline and core in CPI. There’s ample reason to expect a headline rollover in the near term but that’s not so clear with core, which is forecast to rise 0.3% next week. How much is that going to have to slow to halt the Fed’s advance?</p><p>The bond market continues to signal a higher Fed top and Waller endorsed that today by talking about 4% as his baseline. Fed funds have edged toward there for the March meeting (implied 4.01%) while the 2-year yield hit a new cycle high a 3.56% on Friday.</p><p>Have a great weekend.</p>

This article was written by Adam Button at forexlive.com.

<p>It will be a close call but the Nasdaq is threatening to trace out an outside week on the weekly chart. We tracked lower on Tuesday in the appreviated week as part of a seven-day losing streak but we’ve had three strong days of gains since. That’s nearly traced an outside week. To complete it, the Nasdaq would need to close above last week’s high of 12,124.</p><p>The last outside wee we saw in the Nasdaq was in March and that was followed by two more weeks of gains. Ultimately, as inflation jumped and the Fed took a more-hawkish stance, those gains evaporated.</p><p>This time, a rally could be further fueled by a soft CPI report on Tuesday and a less-hawkish Fed on September 21. That’s certainly not my base case but even small shifts at the margins could move the market.</p>

This article was written by Adam Button at forexlive.com.

<p>WTI crude oil settled up $3.25 today to $86.79 on the day. That’s higher than last week’s close at $85.98 and represents an impressive turnaround from $81.20 at yesterday’s low.</p><p>The market is struggling to price in tight global supplies against worries of falling future demand.</p><p>There are also uncertainties about how much natural gas-to-oil swtiching we will see this winter in Europe and Asia. One bullish signal today came from German economy minister Habeck who <a target=“_blank“ href=“https://twitter.com/berlinerzeitung/status/1567934378331836416″ target=“_blank“ rel=“nofollow“>said </a>he wants to put diesel-fired power plant ships off the coast to replace nuclear plants that are shutting down.</p><p>That will add to demand for diesel, where US inventories are already tight according to <a target=“_blank“ href=“https://twitter.com/JKempEnergy/status/1568285479610499074″ target=“_blank“ rel=“nofollow“>John Kemp</a>.</p><p>Mix in uncertainty about the SPR, the Russian price cap/ban, the Iran deal and the economy and it’s a volatile trade. The big doji start on this week’s chart indicates that more wild moves are coming.</p>

This article was written by Adam Button at forexlive.com.

<p id=“P3BBE52BD“ class=“fronthighlights-head-p“>The market is now pricing in a 91% chance of a 75 basis points Fed hike on September 21. The final push came today after Fed Governor Waller <a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-waller-says-he-supports-another-signficant-hike-this-month-20220909/“ target=“_blank“>said </a>the meeting was fairly straightforward and that he expected another big hike.</p><p id=“P3BBE52BD“ class=“fronthighlights-head-p“>Economists will continue to coalesce around 75 basis points now and that continued with Bank of America economists shifting their forecast to 75 bps from 50. They cited comments from Powell yesterday where he made no effort to push back on market expectations for 75 bps.</p><p id=“P3BBE52BD“ class=“fronthighlights-head-p“>Perhaps more importantly, Bank of America took its terminal top to 4.00-4.25% from 3.75-4.00%.</p><p id=“P3BBE52BD“ class=“fronthighlights-head-p“>“We think that more cumulative tightening is needed to restore balance in labor markets,“ they wrote. „We also believe the Fed wants to get to its restrictive policy stance sooner than later.“</p><p id=“P3BBE52BD“ class=“fronthighlights-head-p“>In a separate note, Bank of America Global Research also discusses its expectations for next week’s (Tues) US CPI print for the month of August.</p><p id=“P0F78FD9F“ class=“fronthighlights-text-p“>“In the August CPI report, we look for headline CPI to decline by 0.1% mom, its first decline since May 2020, and for core CPI to advance by 0.3% mom. This would leave headline and core CPI up 8.2% and 6.0% yoy, respectively,“ BofA notes. </p><p id=“P2FA671E3″ class=“fronthighlights-text-p“>“We look for the retracement in energy prices to continue in August as we forecast a 5.2% mom decline following the 4.6% drop in July. Meanwhile, food price appreciation should only ease modestly to 0.9% mom from 1.1% previously. Elevated wages should continue to put upward pressure on food away from home inflation, and though commodity prices have declined recently, this will take time to pass through to consumer prices,“ BofA adds. </p><p id=“P2FA671E3″ class=“fronthighlights-text-p“>For bank trade ideas, <a target=“_blank“ href=“https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD“ rel=“nofollow“ target=“_blank“ data-saferedirecturl=“https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&source=gmail&ust=1662834220914000&usg=AOvVaw0IBG76FJtqqXmrtul82-mQ“>check out eFX Plus</a>. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. <a target=“_blank“ href=“https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD“ rel=“nofollow“ target=“_blank“ data-saferedirecturl=“https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&source=gmail&ust=1662834220914000&usg=AOvVaw0IBG76FJtqqXmrtul82-mQ“>Get it here</a>. </p>

This article was written by Adam Button at forexlive.com.

<p>One of the best trades of this decade will be copper or copper miners with deep inventories. It’s well understood, right down to the government level, that we’re going to need a lot of copper in the green transition and that existing mines aren’t enough. At the same time, investors are unwilling to fund new mine construction because spot copper prices aren’t great and because of inflationary cost increases in mine construction everywhere.</p><p>I’m tempted to think that’s a story that’s so well understood that there’s no money to be made — I’ve <a target=“_blank“ href=“https://www.forexlive.com/news/the-case-for-copper-20220531/“ target=“_blank“>written about it</a> many times — but if you look at how copper miners trade, that’s not the case at all.</p><p>The general consensus is that the big shortage will emerge in 2024 or 2025 as the green transition ramps up and China rebounds but at some point there will be stockpiling ahead of that.</p><p>Is that what’s happening now? Bloomberg <a target=“_blank“ href=“https://www.scrapmonster.com/news/the-copper-market-is-flashing-signs-of-tight-supply/1/84891″ target=“_blank“ rel=“nofollow“>noted </a>that yesterday’s 2.4% rally in copper was the most in give weeks and that front month copper in London is trading with a $145/ton premium over the third month. That kind of backwardation is usually a sign of a tight physical market.</p><p>Even with the slowdown in China, imports there are up 8.1% ytd through August. At the same time, Chilean copper exports are down ytd.</p><p>ZeroHedge today also <a target=“_blank“ href=“https://www.zerohedge.com/commodities/energy-transition-could-be-derailed-looming-copper-shortage“ target=“_blank“ rel=“nofollow“>writes </a>about the looming copper shortage and cites an S&P Platts report that warns the green transition could be derailed by the unavailability of copper.</p><p>Again, this is all well known to anyone who is paying attention. It all really comes down to the question of when to buy copper. It’s certainly cheap now but it’s fallen because of economic worries. However note that copper prices have held up better than many risk assets lately. The weekly chart here also shows that it found support at the 61.8% retracement of the 2020-2022 rally.</p><p>I think this is a tough trade right now because it could be dead money for a couple years but at some point between now and 2025, it’s going to be a sensational trade.</p>

This article was written by Adam Button at forexlive.com.