investingLive Americas FX news wrap 12 Sep: USD closes higher. Univ.of Mich. is weaker

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The USD is closing the day mostly higher, though net changes were limited. The largest moves came against the NZD (+0.30%) and the JPY (+0.26%), while all other major currencies finished within 0.11% of Thursday’s closing levels. Price action was choppy, with the greenback firming ahead of the US session before turning lower after the weaker-than-expected University of Michigan consumer sentiment data.

The preliminary September sentiment index dropped to 55.4 versus 58.0 expected and 58.2 in August. Current conditions were stable at 61.2 (vs 61.3 expected, 61.7 prior), but expectations slumped to 51.8 from 55.9, well under the 54.9 forecast. Inflation expectations were mixed: the 1-year outlook held steady at 4.8%, while the 5-year measure rose to 3.9% from 3.5%. Although the survey has lost much of its past influence due to politicization, the Fed still keeps an eye on it. The credibility of the index was damaged post-COVID when a spike in inflation expectations spurred a rate hike that was later walked back.

Despite the weak sentiment data, US yields pushed higher, perhaps reflecting concerns about sticky inflation expectations. On the day, the 2-year yield rose 3.3 bps to 3.561%, the 5-year climbed 5.5 bps to 3.633%, the 10-year advanced 5.5 bps to 4.066%, and the 30-year increased 3.0 bps to 4.61%.

For the week, the Treasury completed auctions of 3-year, 10-year, and 30-year securities. International demand was particularly strong in the 3- and 10-year sectors, while the 30-year sale drew only average interest. Yield curve dynamics reflected a flattening bias, with the front end moving higher while the long end eased: the 2-year gained 5.3 bps, the 5-year gained 5.3 bps, while the 10-year fell 0.8 bps and the 30-year declined 7.9 bps. At its lows, the 10-year yield dipped to 3.996%, the lowest since the week of April 7, 2025.

US stocks today close mixed with the Dow industrial average and the S&P index moving lower while the NASDAQ index rose and closed at a new record level.

• Dow industrial average -273.78 points or -0.59% at 45834.22.
• S&P index -3.18 points or -0.05% at 6584.29.
• NASDAQ index +98.03 points or 0.44% at 22141.10.
• Russell 2000-24.46 points or -1.01% at 2397.06.

For the trading week, the indices all closed higher:

• Dow industrial average rose 0.95%
• S&P index rose 1.59%.
• NASDAQ index rose 2.03%
• Russell 2000 rose 0.25%.

Next week, no fewer than four central banks will announce their interest rate decision:

The Federal Reserve holds its FOMC meeting on September 16–17. Markets are broadly expecting a 25 bp rate cut, with some chatter about the possibility of a larger move if data continues to weaken. Investors will pay close attention to the Fed’s updated projections, as well as Powell’s tone on labor market softness and inflation dynamics. Labor market indicators have been signaling cracks, and consumer sentiment has weakened, adding pressure on the Fed to ease policy

The Bank of Canada meets on September 17. The Canadian economy has slowed (employment statistics were weak last Friday), with growth under pressure and inflation easing, which gives policymakers scope to cut rates. Markets are pricing in the likelihood of resumed easing, though perhaps at a slower pace than in the U.S. The tone of the BoC statement will be important for gauging how far and how quickly it plans to move on policy over the coming months

The Bank of England announces its policy decision on September 18. Expectations are for the BoE to keep its Bank Rate unchanged, as inflation remains relatively high and policymakers appear less convinced about the need for additional easing in the near term. Markets will be closely watching the vote split and forward guidance to see if any cracks emerge among committee members about the timing of cuts.

The Bank of Japan meets on September 18–19, with policymakers widely expected to keep the policy rate unchanged at 0.5%, following earlier hikes this year. Markets anticipate that the BOJ could raise rates again in Q4 2025, potentially by 25 bps, if inflation and wage growth continue to show strength. A weak yen remains a key risk, as it amplifies import costs and inflation pressures, while political uncertainty after Prime Minister Ishiba’s resignation adds another layer of complexity . The BOJ is also under watch for signals on its gradual stimulus exit, including the potential unwinding of ETF holdings. Overall, the meeting is expected to be steady on rates, but investors will be focused on forward guidance and any revisions to inflation projections in the updated Outlook for Economic Activity and Prices.

Together, these decisions will set the tone for global markets next week. The Fed is widely seen as leading the easing cycle, while the BoC may follow cautiously, and the BoE is expected to hold steady for now. Inflation readings, labor market data, and geopolitical developments will remain the key wildcards shaping central bank communication and investor reaction.

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