The market is on edge. Anxiety levels are rising. Partly, it's geopolitics and partly, it's market stress.
The dollar has a stronger bias but dollar-bloc currencies have recovered from their earlier losses to trade a little higher against the greenback. The Japanese yen has not changed much in value, but it is still trading above JPY150. The majority of emerging market currencies also trade heavier.
Today, the 10-year JGB yield reached a new record near 0.87%. However, European and US bond rates are slightly lower.
Gold is up from $1954 yesterday to $1993.50 now. The high for last week was just above $1997.
After recovering from nearly $82 yesterday, December WTI is now straddling $85 per barrel.
There are two conflicting forces. The dollar has been favored by the US's resilience and its rising rates. On the other hand, A change in Japanese monetary policies is expected to lead to higher rates at home and a stronger Japanese yen.
The greenback, encouraged by higher US yields and wider gains, pushed above JPY150 yesterday afternoon in North America.
Yesterday, the Australian dollar had a down day. The Australian dollar first rose above Tuesday's peak in response to a smaller-than-expected slowdown in inflation in Q3, and then reversed lower to settle below Tuesday's lowest. It was slightly above $0.6300, but sold at $0.6270 earlier this morning. This is a new year's low.
After a flat performance in Q2, the German economy seems to have contracted once again in Q3. Euro zone growth is expected to be stagnant in Q3.
The ECB does not seem to have a compelling need to raise rates today. The swap market also sees little chance of any movement.
After the disappointing PMI, the euro has been heavily traded since Tuesday. The divergence between the US and the euro was also highlighted. Yesterday, the euro's losses reached almost $1.0565. Today, the euro fell below $1.0535 due to a follow-through sale.
Sterling is also in a poor trading condition. The pound was bought below the low of last week, around $1.2090, and it tested the $1.2070 region. Initial resistance may now be around $1.2100-15.
Markets seem to be preparing for a strong US Q3 GDP. Atlanta Fed's GDP Tracker, which is usually fairly accurate at this stage of the cycle, predicts a growth rate of 5.4% on an annualized basis, while Bloomberg's median forecast is 4.5%.
As expected, the Bank of Canada kept its overnight target rate at a level of 5.0%. The Bank of Canada has said that it is prepared to increase rates again if needed, but the market does not believe it. The odds for a December rate hike were essentially unchanged, hovering just above 20%.
Yesterday, the Canadian dollar hit a new low of seven months after the Bank of Canada kept rates at current levels and provided more challenging economic forecasts.