The U.S. Dollar is trading in favorable ranges to start the week with markets mixed as the U.S. government shutdown continues while tech firms are surging
Overview
Large companies in Advanced Micro Devices Inc. and OpenAI signed a deal combining chipmaking and a rollout of artificial intelligence that could produce tens of billions in revenue. AMD shares climbed 28.0% in pre-market trading as a result. Regardless of negativity in mood and headlines, earnings have fared well for publicly traded firms while the so-called “Magnificent Seven” thrive and keep beating expectations. Some analysts are saying that we will run into a slowdown in equity surges soon so we will be watching out for that volatility affecting FX flows.
Without official data, the labor sector looked a bit fragile per private research indicators. While traders seem convinced there will be 50 basis points cut by the Fed to aid the financial environment, the odds of that materializing have gone down a bit from the almost guaranteed reading of 95.0%+ last week. Some economists are thinking that January will be perceived by officials as more appropriate a time to cut after October. We may get a surprise when it comes to the havoc in Washington DC as officials look to avoid going 35 days without federal payouts as it was last time it occurred.
What to Watch This Week…
- Monex USA Online is always open
EUR ⇓
The Euro is down by almost half a percent as a busy weekend in France renewed concerns over political instability in the EU’s second largest economy. Domestic stock exchange CAC 40 went down by 2.1% following the resignation of Prime Minister Sebastien Lecornu. President Emmanuel Macron named a brand-new cabinet, which has only worsened the political turmoil. This year has been a pain for anyone taking the PM role since the main problem remains unsolved: how to pass a budget with a fractured parliament that would include unpopular spending cuts as well as higher taxes to help alleviate the worst deficit in the Euro-zone.
JPY ⇓
The Japanese Yen is trading at its weakest levels against the Buck since end of July after an eventful weekend that produced a new Prime Minister for the Pacific Rim power. Sanae Takaichi was chosen as new PM in a ruling party leadership vote, making history as the first ever woman to become premier. Japanese bonds fell the most in months with worries that her new government will sell more debt in order to finance planned tax cuts. There is a will to be more expansionary when it comes to fiscal policy as spending is needed to boost activity and get the economy away from negative Gross Domestic Product readings. Chances of the Bank of Japan hiking interest rates have also been drastically reduced to below 20.0%.
