North American FX Open - Dollar still in demand ahead of US PPI update

The DOLLAR has edged back from yesterday's near two month highs, as the market waits for US PPI data, after yesterday's upside surprise from the CPI data. The DXY hit 103.178 yesterday afternoon, after the Fed's Bostic admitted that he is definitely open to holding rates steady in November. He added that he is totally comfortable in skipping a meeting rate cut wise, if the data suggests that's appropriate.

Overnight the Fed's Goolsbee repeated that inflation has cooled and that the job market is strong, while once again emphasizing that the Fed must now focus on both sides of the dual mandate.

Traders continue to look ahead to this weekend's expected Chinese stimulus announcement, with expectations that China's finance minister could announce around Rmb 2tln (Usd 283bln) in fresh fiscal stimulus Saturday as Beijing seeks to support the world's second largest economy, boost confidence and help the government achieve its around 5% GDP target for 2024.

Just how important the briefing will be is highlighted by the extreme volatility we have seen in Chinese stocks this week, its wildest week since 2015.

The UK economy returned to growth in August, posting an as expected expansion of 0.2%, after two months of flat readings. Meanwhile IP beat forecasts and the trade deficit came in narrower than expected in August.

US 10 year yields have rallied close to the 4.1% level again, which should underpin the Dollar going forward.

As well as the US PPI report for September, there is also the release of the Canadian employment report for September, the UMich sentiment survey and the Bank of Canada's Q3 Business Outlook survey.

Employment is expected to rise by 27k in Sep in Canada, with the unemployment rate set to tick up to 6.7%, which would be the highest rate since September 2021 and will again highlight the contrast in the jobs market between the US and Canada.

Fed speakers today include Goolsbee again, Logan and Bowman.

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