North American Summary and Highlights 16 September

North American session

Trade was fairly quiet heading into the FOMC. August retail sales were stronger than expected, rebounding from a weak July by 1.2% overall and 1.4% ex autos. Sales rise 1.2% ex autos and gasoline and 1.4% in the control group that contributes to GDP. Later September’s NAHB homebuilders’ index slipped to a 12-month low of 32 from 35.  

The USD picked up on the FOMC decision and extended gains through the Warsh press conference. The 25bps tightening was as expected but the dots showing a further tightening this year and no easing in 2027 were hawkish, as were a lack of dissenting votes and Warsh’s subsequent tone.  

USD/JPY bounced a big figure to around 156.20 while EUR/USD fell to 1.1470 from 1.1540. USD/CHF rose to .825 from .820 while GBP/USD fell below 1.34. USD/CAD came close to 1.40 where it found resistance. AUD/USD fell below .71. UST yields bounces while equities fell. 

European session 

Limited action with FX little moved across the board after Tuesday’s position adjustments, as one would expect into such a key FOMC meeting.  Hike largely priced in from the FOMC but pivotal will be the projections, commentary and tone. Oil inching off $1, equities a little firmer, and US10s just off the 5% mark at 10s in the run in.Main news in the morning comes from UK CPI, headline up to 3.1% very much as expected, with the core rate holding 2.6%. PPI data firmer on output prices (though core steady) and input prices up strongly to 6.1%y/y. Sterling little moved by data again that, following the softer labour data on Tuesday, maintains the broad recent UK themes.