The U.S. Dollar extends its slide against G10 peers, on track for largest single week loss in a month.
Overview
The longest government shutdown in American history has finally come to a close, but that hasn’t offered the Buck any reprieve as we continue to remain blind in regard to the latest economic data. Retail Sales, Producers Price Index and Business Inventories have been further delayed, adding to concern about lack of available analysis and breakdowns. Speeches from Fed members Schmid, Logan, and Bostic are the only scheduled events with any weight going into the weekend. While traders are starved for data, the likelihood of another rate cut in December is barely holding above 50.0% as the quality of those upcoming economic numbers has been called into question.
What to Watch This Week…
- Monex USA Online is always open
GBP ⇓
Sterling dove nearly 0.5% this morning on a series of mixed messages regarding UK fiscal policy from Finance Minister Reeves and serious concerns that the government will not be able to fill a 35.0 million Pound budget deficit. Government borrowing costs have jumped the most since July, but reports indicate that Reeves is likely to drop or heavily modify their plans to raise the income tax, despite pre-election promises, thereby risking fiscal instability as the coffers refill more slowly. While some traders think this is an overreaction in the market, the November 26th budget announcement will be the real indicator of the Pound’s stability.
CHF ⇑
The Swiss Franc is at a decade high as expectations of higher inflation and lower U.S. tariffs increase demand for safe havens. While some Swiss National Bank officials have grown uncomfortable at the rate of appreciation of the Franc, the likelihood of a return to negative interest rates has been slashed to 30%, down from 64% only a month ago. Separately, reports that Switzerland is nearing an agreement to secure a 15% tariff on exports to the US gave the Franc an additional boost.
