US CREDIT UPDATE: Bill introduced to eliminate tariff on coffee-Credit Positive

Ahead of the Jackson Hole Symposium this weekend, we've published our digest of relevant Fed commentary since the last meeting in July - PDF here. 

• Our latest update includes an update of MNI's Hawk-Dove Spectrum - see below.
• Of the 18 current FOMC participants, there appears to be a nearly even split between those who at this point would likely support a rate cut in September, and those who would not. Most members may have to "wait and see" what the data holds between now and then before deciding.
• In our assessment of 18 FOMC members (down from the usual 19 due to Gov Kugler’s surprise resignation this month) we see currently 4 in favor of a September cut (2 of which are voters), 10 that could be persuaded to do so (7 of which are voters), and 4 who are likely opposed as it stands (2 of which are voters).
• Recall that the June meeting's Dot Plot showed a split between participants eyeing either zero or two cuts by year-end.
• We don't our current assessment as inconsistent with the July meeting minutes released subsequent to the publication of our Jackson Hole preview, which showed a majority "judged the upside risks to inflation" as greater than that to employment, with "several" seeing the risks as "roughly balanced" and a "couple" seeing employment risks as prevalent.
• In short, the July employment report (out after the meeting) likely shifted some more into the "several" seeing risks as "roughly balanced", while in any event the majority of the Committee is likely to be swayed at the September meeting by Chair Powell's viewpoint at that time - there are no signs he has made up his mind yet (our Jackson Hole preview suggests he may not clearly signal a September cut in his speech).

• RES 4: 1.4111 High Apr 10  
• RES 3: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg 
• RES 2: 1.3920 High May 21
• RES 1: 1.3884 High Aug 20
• PRICE: 1.3863 @ 16:26 BST Aug 20
• SUP 1: 1.3759/22 50-day EMA / Low Aug 22
• SUP 2: 1.3576 Low Jul 23 
• SUP 3: 1.3557/40 Low Jul 3 / Low Jun 16 and the bear trigger
• SUP 4: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing

A strong rally Tuesday in USDCAD and Wednesday’s print above resistance at 1.3879, the Aug 1 high, highlights a resumption of the bull cycle that started Jun 16. This also negates a recent bearish threat. An extension and a clear breach of 1.3879, would signal scope for a climb towards 1.4019, a Fibonacci retracement. On the downside, support to watch lies at 1.3759, the 50-day EMA.  

• Treasuries look to finish modestly higher Wednesday, off midday highs after slightly mixed messaging from the July FOMC minutes regarding the inflation outlook, labor market, and ultimately policy.
• Tsy Sep'25 10Y contract trades +4 at 111-28.5 after the bell vs. 112-00.5 high, Initial technical support well below at 111-11 (50-day EMA); resistance above at 112-15.5 (High Aug 5 and the bull trigger). Curves mixed: 2s10s -1.699 at 53.911, 5s30s +.196 at 108.438.
• A majority of participants judged the upside risk to inflation as the greater of these two risks, while several participants viewed the two risks as roughly balanced. "Almost all participants viewed it as appropriate to maintain the target range for the federal funds rate at 4.25% to 4.5%".
• Limited data: MBA composite mortgage applications edged -1.4% (sa) lower last week to hold onto most of its refi-driven 11% increase the week prior. Indeed, new purchase applications increased 0.1% after 1.4% whilst refis dipped -3.1% after 23.0%.
• DJIA index staged a late session rebound while Nasdaq traded weaker - weighed by chip stocks amid reports the Trump admin "may seek equity in any such firms awarded federal grants under the Biden-era CHIPS Act."
• The Greenback see-sawed lower (BBDXY -.35 at 1206.64) adopting a more neutral position headed into Friday's Jackson Hole appearance from Chair Powell.