USD
The Fed’s favourite gauge is about to be rewritten.
DXY closed the week 0.75% higher at 100.97, even after Friday’s pullback on Hormuz headlines. The front end did the lifting: the 2Y has added 72bp since Jackson Hole through Thursday, the largest 21-day jump since March 2023, and the 10Y closed at 5.17%. Money markets put the odds of a second straight hike on Oct. 28 at around 64%, and futures carry roughly three more over the next twelve months. The Fed’s own dots show one. Wednesday’s August PCE comes first. Core PCE runs near 3.2% against 2.4% for core CPI, the widest positive gap in over four decades. The BEA’s annual revision introduces a new method for financial-services fees, a category that on its own added more than 0.4pp to core PCE in July. A lower revised profile weakens the case for October. Payrolls on Friday: Analysts expect around 100k with a downward revision to August’s 162k, since the low-hire, low-fire pattern has not changed. Unemployment is seen at 4.1%, wages at 3.2% y/y. A print like that keeps October live without settling it. September CPI on Oct. 14 is the second deciding report. JOLTS comes Tuesday (7.27m prior), ADP Wednesday, ISM manufacturing Thursday (54.6 prior). Overall skew: supported while yields hold. A downward PCE revision is the release this week that can take October off the table.
