Good morning and welcome to the Morning Kickstart post and video for the North American session on Monday, September 14.
The new trading week begins with the USD higher against all the major currencies. US stock futures are lower, led by declines in technology and AI-related shares. Crude oil is sharply higher as Saudi Arabia faces growing threats from the Iran-backed Houthis, while US Treasury yields are little changed.
The Federal Reserve highlights a busy week for central banks. The Fed announces its decision on Wednesday, followed by the Bank of England and Bank of Japan on Thursday.
USD starts the week higher
The greenback has its largest gains against the NZD, JPY and AUD. The changes of the USD versus the major currencies show:
- NZD: USD up 0.69%
- JPY: USD up 0.63%
- AUD: USD up 0.52%
- EUR: USD up 0.45%
- GBP: USD up 0.21%
- CAD: USD up 0.13%
- CHF: USD up 0.11%
The USD is benefiting from safe-haven flows, rising oil prices and expectations that the Federal Reserve will raise interest rates this week.
The low-to-high ranges compared with the average true range over the last 21 trading days show:
- EURUSD: The range is 63 pips compared with an average true range of 46 pips. That represents approximately 137% of its average range. EURUSD has already exceeded what would be considered a normal trading range.
- GBPUSD: The range is 55 pips, equal to its 55-pip average true range. GBPUSD has completed a normal full-day range.
- USDJPY: The range is 137 pips compared with an average true range of 121 pips. That represents approximately 113% of its average range. USDJPY has already exceeded its normal range.
- USDCHF: The range is 39 pips compared with an average true range of 53 pips. The pair has completed approximately 74% of its average range, leaving some room to roam if USD buying continues.
- USDCAD: The range is only 37 pips compared with an average true range of 62 pips. The pair has completed approximately 60% of its average range, leaving it with the greatest room to roam among the major currency pairs.
- AUDUSD: The range is 42 pips compared with an average true range of 43 pips. AUDUSD has completed nearly all of its normal range.
- NZDUSD: The range is 52 pips compared with an average true range of 47 pips. That represents approximately 111% of its average range. NZDUSD has already exceeded its normal range.
Overall, USDCAD has the greatest room to roam, having completed only around 60% of its average range. USDCHF, at approximately 74%, also has room for additional movement.
By comparison, EURUSD, USDJPY and NZDUSD have already completed or exceeded their average ranges. GBPUSD and AUDUSD have also completed nearly 100% of their typical ranges. Although those pairs can extend further, they do not have the same range-based room to roam as USDCAD and USDCHF.
The average true range is not a ceiling. A currency pair can continue beyond its normal range, especially when geopolitical headlines and central-bank expectations increase volatility. However, traders should recognize when a move has already become extended and manage their risk accordingly.
AI concerns weigh on US stock futures
At 8:00 AM ET, US stock futures are pointing to a sharply lower opening, led by the technology-heavy Nasdaq:
- Dow Industrial Average: Down 133.29 points
- S&P 500: Down 37.23 points
- Nasdaq Composite: Down 423 points
Technology and semiconductor shares are under pressure after prominent AI executives called for slowing the development of advanced AI models because of growing safety concerns.
Anthropic CEO Dario Amodei called for greater caution, while OpenAI CEO Sam Altman and Elon Musk also expressed concerns about the speed of AI development.
For investors, the worry is that increased scrutiny could lead to tighter regulation, development delays and a cooling of the enormous AI capital-spending boom that has supported technology shares.
Nvidia is lower in premarket trading, while Intel, AMD, Marvell and other semiconductor companies are also under significant pressure.
The AI news is having its greatest effect on the Nasdaq. However, rising oil prices, inflation concerns and expectations for a Federal Reserve rate increase are also weighing on the broader equity market.
Saudi Arabia’s troubles with the Houthis send oil higher
WTI crude oil is trading at $102.65, up $2.60 or 2.60%.
The Iran-backed Houthis have expanded their control in Yemen, capturing the port of Mocha and strategically important Perim Island near the entrance to the Bab al-Mandeb Strait.
That increases the threat to one of the world’s most important routes for commercial shipping and energy supplies.
Saudi Arabia is also dealing with the shutdown of its East-West oil pipeline following a drone attack reportedly launched from Iraq. The pipeline allows Saudi Arabia to transport oil from its eastern producing region to export facilities on the Red Sea, bypassing the Strait of Hormuz.
The pipeline has become especially important because of disruptions around Hormuz.
Saudi Arabia does not want to be pulled back into another prolonged war in Yemen, but its options are becoming increasingly limited. Riyadh can retaliate and risk a broader regional conflict, or continue exercising restraint while the Houthis expand their territorial control and threaten Saudi infrastructure.
For the oil market, the concern is that two critical energy corridors—the Strait of Hormuz and Bab al-Mandeb—could face disruptions at the same time.
There is also uncertainty about how quickly Saudi Arabia can reopen the East-West pipeline. The longer it remains closed, the greater the potential effect on Saudi exports and global oil supplies.
Higher oil prices create another problem for central banks. A renewed energy shock can lift headline inflation, increase transportation and production costs, and eventually work its way into broader consumer prices.
Fed, BOE and BOJ decisions highlight the week
The Federal Reserve announces its interest-rate decision on Wednesday.
The market expects the Fed to raise its target rate by 25 basis points to 4.00% from 3.75%. Traders will also receive updated economic projections, the FOMC statement and the Fed chair’s press conference.
The press conference and economic projections will be important because markets will want to know whether the expected increase is a one-time adjustment or the beginning of a broader tightening cycle.
The Bank of England announces its decision on Thursday. The BOE is expected to leave its official bank rate unchanged at 3.75%, with the focus turning to the vote and guidance about future policy.
The Bank of Japan also meets on Thursday. Traders will be watching for a potential policy adjustment of 0.25% higher, and signals about the future path of Japanese interest rates.
ECB officials remain focused on inflation
The comments come after the European Central Bank raised interest rates last week.
ECB Governing Council member Yannis Stournaras said timely ECB action could reduce the risk that much larger rate increases are required later, which would cause more economic pain.
ECB Executive Board member Isabel Schnabel said the recent rise in oil prices is “quite worrying.”
Those comments highlight the dilemma facing global central banks. Policymakers want to avoid overtightening and unnecessarily weakening economic growth. However, rising energy prices increase the risk that inflation remains elevated and interest rates stay higher for longer.
US Treasury yields are little changed
US Treasury yields are little changed as traders await the Federal Reserve decision:
- 2-year yield:4.6408%, down approximately 0.3 basis points
- 5-year yield:4.7968%, up approximately 0.6 basis points
- 10-year yield:4.9731%, down approximately 0.2 basis points
- 30-year yield:5.3522%, down approximately 0.2 basis points
The limited movement suggests the bond market is waiting for Wednesday’s Fed decision, updated projections and guidance about what may come next.
Other markets
- WTI crude oil: $102.65, up 2.60%
- Gold: $4,296.24, down 1.18%
- Silver: $63.04, down 2.21%
- Copper: $6.4250, down 1.88%
- Bitcoin: $77,845, up 1.35%
Today’s economic calendar
Canada’s inflation report is the main economic release during the North American session:
- Canada CPI month over month is expected at −0.1%, down from +0.5% previously.
- Canada median CPI year over year is expected at 2.0%, unchanged from the previous month.
- Canada trimmed CPI year over year is expected at 1.9%, unchanged from the previous month.
Later in the week, traders will receive UK employment and inflation data before the central-bank decisions take center stage.
In the morning video above, I take a look at the three major currency pairs—EURUSD, USDJPY and GBPUSD—from a technical perspective. I outline the key levels in play, explain which side has control, and identify what buyers and sellers must do to increase the bullish or bearish bias as the new trading week gets underway.
The new trading week begins with several significant forces affecting the markets simultaneously: a likely Federal Reserve rate increase, an AI-led technology selloff, rising oil prices and escalating Middle East risks.
Those themes should keep volatility elevated. The fundamental headlines may provide the catalyst, but the technical levels will tell traders whether the buyers or sellers are maintaining contro
This article was written by Greg Michalowski at investinglive.com.
