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The better US jobs data, keeps the Fed on track toward a 75 basis point hike in early November and another 50 basis points in December. That would bring the Fed target rate to 4.5%. The question is what will the terminal rate be and when? The Fed dot plot saw a terminal rate at 4.6% in 2023 which implies just a single 25 basis point hike in 2023. The Fed is looking at the 4.50-4.75% rate as being restrictive. Is it restrictive enough?
Next week, the US CPI and PPI data will be released.
A snapshot of the currency markets shows the CAD is the strongest while the EUR is the weakest. The US dollar is mixed after trading lower before the report.
The strongest to weakest of the major currencies
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