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USD is relatively unchanged into the start of the week while both bonds and stocks recovered some ground as oil retreated and in anticipation of the US President Donald Trump and China’s Xi Jinping summit. The upbeat start of the week is also providing support to high beta currencies in the G10 FX space, with both AUD, and NZD outperforming into the start of the session, while the JPY and CAD remained at the bottom of the table dropping 0.25%.

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Global equities are mixed, while yields are higher amid a slight rally in gas prices. JPY is the big underperformer overnight, as the BoJ hiked but the vote share and Ueda’s comments leaned dovish. AUD is the outperformer amid a hawkish testimony from the RBA’s Bullock. Otherwise, ranges are relatively muted in G10 FX.

The Fed’s latest message is notably optimistic: inflation can return to target without a meaningful hit to growth or employment. In this week’s article, Chief Economist, Avery Shenfeld examines the assumptions behind that view and why that outlook may be too optimistic given energy risks, higher yields, and slowing interest-sensitive sectors.

Following yesterday’s rally in the greenback and the rise in short-term UST yields after the Fed’s hawkish decision, the dollar edged lower at the start of the session. Global bond markets also recovered some ground after the initial spike, as the Fed’s rate hike and renewed commitment to fighting inflation appeared to calm markets.

Relatively muted moves this morning, with oil roughly flat and global equities slightly higher. Within G10 FX ranges are similarly muted, with the USD roughly flat. GBP is a slight G10 underperformer amid a rally in yields as services CPI in Aug remained slightly better behaved than expected.