Markets are relatively stable this morning ahead of Fed Chair Powell’s noon speech at the Economic Club of New York. Excluding geopolitics, the primary topics of discussion today are US Treasury yields, specifically the 10-year part of the yield curve. While it has retraced slightly, the yield was 2 basis points shy of 5% earlier today, a psychological threshold for many.

Adding to this pressure is today’s weekly jobless claims figure, with 198k total new claims versus the expected 210k and a prior reading of 211k. The continued resilience of the US job market is a major factor in Fed policy.

At 10 am EST, Existing Home Sales figures will also be released for the US. Some Fed speakers this week have emphasized that the bond market has been doing their job by raising effective interest rates, but many of these moves are in response to the perceived future Fed policy.

Yesterday’s Beige Book used a lot of soft language, such as "modestly" and "slightly," in relation to business activity and prices, casting doubt on another increase in rates. One could argue that an additional 25 bps doesn't significantly impact the situation, and the real question is the extent of the longer part of the Fed's "higher for longer" narrative.

EUR/USD is higher on the day without much Eurozone-specific news. Given that the spot had dropped as much as 3% in the last 30 days (and even more when looking further back), this retracement of about 1.25% from the lows earlier this month is relatively reasonable.

USD/CAD is slightly higher on the day as oil prices cool off due to the US relaxing some sanctions on Venezuela. This is likely a strategic response to developments in the Middle East that have recently pushed up oil prices. Producer-side pricing data released this morning showed an uptick in raw material prices of 3.5% versus an expected 1.7%, in contrast to recent CPI data. Whether this will affect the Bank of Canada's rate decision next Wednesday remains to be seen.

GBP/USD is close to unchanged on the day as lingering concerns about potential stagflation in the United Kingdom weigh on the Pound. It's worth noting that against the Euro, the Pound is at a 5-month low.

USD/MXN continues to rise this morning, now firmly above its 200-day moving average. The pair is up over 10% from the lows seen in July. Retail sales are set to be released tomorrow at 8 am.

USD/BRL is marginally higher on the day and has been a surprising source of stability within the Emerging Markets space ever since the conflict in the Middle East began 12 days ago. The pair has shrugged off a lot of macro-negativity due to the rise in oil prices and the decreased likelihood of aggressive rate cuts anytime soon. That being said, Brazilian Central Bank President Campos Neto today mentioned that inflation in Brazil is now qualitatively better, implying that the need for continued aggressive policy has somewhat diminished.