The US session started with the UK PM Truss announcing here resignation. The resignation became increasingly expected and ended the shortest term ever for a UK PM. The previous shortest term was George Canning, whose sole term lasted 119 days from 12 April 1827 until his death on 8 August 1827. The term went downhill after announcing the details of the mini budget that proposed large unfunded tax cuts. That led to a sharp run up in yields, a sharp decline in the value of the GBP (the GBPUSD moved to the lowest levels on record) and to the sacking of her Chancelor of the Exchequer in an attempt to appease her party members and save her from the same fate. That was not meant to be. The movement for the next shoe to drop (her sacking) took a matter of days. If her term officially ends on October 28, the term would have lasted 58 days. Give or take, it will be the shortest term on record.

The forex market did react with buying and then sell the fact selling that took the GBPUSD back below the 100 hour MA. However, momentum could not be sustained and a rally ensued.

That move was helped by a move higher in stocks (risk on?) and some moves lower in yields from highest levels in 2007/2008 in the US.

However, Fed’s Harker threw cold water on the markets price action saying.

• Fed to keep raising rates for a while
• needs to see sustained dropin inflation to change policy outlook
• Fed actively trying to slow economy to curtail fresh inflation
• Fed has made disappoint progress at lower inflation
• Fed funds rate likely well above 4% by year-end

• inflation likely to fall around 4% next year at 2.5% in 2024

The comments reminded the markets of the hawkish side of the Fed after some “less hawkish” comments of late which had market traders thinking tightening cycle was near the end and the Fed had to be careful about over doing it. Harkers thoughts that 4% inflation in 2023 would fall to around 4% and 2.5% in 2024 (still above the target 2%), was not what buyers of risk (like stocks), sellers of dollars, buyers of bonds, wanted to hear. The dollar moved back higher, stocks moved lower and yields moved to new highs.

Although the dollar is off it’s lows, it is still trading mixed. The greenback is lower vs the EUR, GBP, CHF, CAD, but higher vs the JPY (12 days in a row), AUD and NZD. The snap shot of the strongest to the weakest has the AUD as the strongest and the JPY as the weakest. Most of the pairs are near each other as flows shift.

The USDJPY has move back above the 150.00 level after trying earlier the day to 150.08. The pair is currently trading above that level at 150.16.

The EURUSD is back below its 100 hour moving average at 0.9799, but above its 200 hour moving average at 0.9760. The pair currently trades at 0.9778.

Teh GBPUSD is trading below its 100 hour MA at 1.1276 but above it 200 hour moving average at 1.1198. The current price is at 1.1220.

In other markets:

• spot gold is trading up $1 or 0.06% at $1630.23
• spot silver is up $0.24 or 1.34% $18.66
• the price bitcoin is trading just above the $19,000 level at $19,082.

Looking at the US stock market to hours the close:

• Dow industrial average is down 86 points or -0.28% at 30337
• S&P index down -28 points at -0.77% at 3668.70
• NASDAQ index is down -65.58 points -0.61% at 10615.45
• Russell 2000 is down -20.55 points or -1.19% at 1705.19

Looking at US yields:

• 2 year 4.603%, +5.2 basis points
• 5 year 4.437% +8.6 basis points
• 10 year yield 4.219% +9.1 basis points