The U.S. Dollar is trading in tight ranges while looking slightly more positive than yesterday as markets are reacting to the U.S. government shutdown effects and how it could affect data releases.
Overview
Equity markets continue to rise despite negative labor data from Wednesday as tech companies continue to ride on the momentum from A.I. developments. As markets ignore the negative, odds of further Fed intervention for the remainder of the year are increasing.
Probability that the Fed reduces interest rates by 50 basis points in Q4 stands at over 95.0%. While the U.S. government faces a shutdown, there is still an appetite for risk as well as higher participation in the Gold-speculation world. Meanwhile, oil prices are going down as OPEC+ warns that there is a global gut, thus causing a drop for WTI Crude which is now at $61.0/barrel, the lowest level in four months.
While some economists worry about cyclical demand weakness from the labor numbers and what the official could offer, the Buck remains in a back-and-forth that ultimately translated into a half percent overall loss in value for September. We shall see if data is indeed at peril or if some sort of deal gives resolution to uncertainty revolving around the ability to fund federal activity. With China still shut for Golden Week, all eyes are on the Western front.
What to Watch This Week…
- Euro-zone CPI, Friday
- US Nonfarm Payrolls, Friday 8:30 AM
- Monex USA Online is always open
EUR ⇓
The Euro is trending a bit down following a bit of U.S. Dollar recovery accompanied by concern over labor in the Euro-zone. The Unemployment Rate for August came in slightly higher than expected at 6.3% vs. 6.2% while major member economies such as France also face labor strikes in protest of government fiscal upheaval. In the past few weeks, the shared currency has failed to do a significant pivot one way or the other, losing only 0.3% against the Buck as the new quarter may bring a deeper central bank policy divergence that can affect the pair. Tomorrow we will get Purchasing Managers’ Index figures as well.
MXN ⇓
The Mexican Peso is also trapped in tight ranges while investors and traders await news over the U.S. government. Tomorrow will give us Private Consumption as well as Gross Investment measures from August that could boost the currency if there is no U.S. data to counter it. Vehicle Production and Consumer Confidence from September may also help if better than expected.
