The FP Markets Research Team produces First Light News during the early hours of the European session, a daily Market Briefing that helps ensure traders and investors are up to date in the macro space for the day ahead.

Good morning.

The start of the week has been subdued in the macro space; aside from the Reserve Bank of Australia (RBA) increasing the Official Cash Rate (OCR) by 25bps yesterday, tier-1 data has been limited, and today promises much of the same.

However, a handful of Fed officials graced the headlines yesterday.

Federal Reserve Governor Michelle Bowman echoed a hawkish view, backing the possibility of another rate increase. At ‘the 2023 Ohio Bankers League ‘Main Event’, Columbus, Ohio, Bowman commented: ‘My colleagues and I will make our decisions at each meeting based on the incoming data. However, I remain willing to support raising the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or is insufficient to bring inflation to 2% in a timely way’.

Federal Reserve Bank of Dallas President Lorie Logan communicated that inflation ‘remains too high’. Logan added: ‘The core question is whether financial conditions that we’re seeing today are sufficiently restrictive to return inflation to 2% in both a timely and sustainable way’.

Federal Reserve Bank of Minneapolis President Neel Kashkari stated that the inflation problem is still not under control and that the Fed has work to do. Kashkari did, nevertheless, note that the economy has proven resilient despite the rate increases. This indicates that he may support another rate increase down the road.

Finally, speaking on CNBC, Chicago Federal Reserve Bank President Austan Goolsbee stated that a soft landing remains on the table and that there is a possibility of doing that without a recession—he referred to this as the ‘Golden Path’. Goolsbee added: ‘My conditions for when we should be done [rate hikes] is we’re back on path to get inflation down to target’.

You may have noticed that the US Dollar Index rebounded (almost to the point) from daily support at 105.04 this week; this was a noted level to keep an eye on in this week’s Weekly Market Insight and resistance is now in play at 105.76.

Also notable, the S&P 500 is heading north of a key resistance on the daily scale at 4,363. This was a possible move highlighted in the aforementioned Weekly Market Insight and one which could stir further outperformance toward October tops at 4,393 and perhaps resistance at 4,473 given room for monthly and weekly price to explore higher terrain.

S&P 500:

(Trading View)

Looking ahead, as noted above, there is not much to get our teeth into regarding economic data today. However, as we enter the second half of the week, things should begin to heat up with more Fed officials due to speak, along with inflation numbers out of China (CPI and PPI). Friday will also see preliminary Q3 UK growth numbers as a key release, followed by preliminary US UoM consumer sentiment data.

G10 FX space as of 08:20 am GMT:

(Trading View)

Thanks for reading. Have a great day.

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