The U.S. Dollar remains trading in mostly familiar ranges ahead of this week’s main risk event in the Federal Open Market Committee decision and press conference tomorrow.
Overview
Additionally, traders and investors are looking forward to earnings reports in the next few days from some of the largest publicly traded companies, which could also add to tension about how the Fed feels about the economy. Inflation seems to be tamed, but still ongoing while gauging the Labor sector and overall economic activity is tough without the ability to use official government data. Although we are in the midst of a government shutdown, the focus across market classes is of interest rates and how much alleviation the financial environment will achieve from stimulus-driven central bank action.
As the S&P 500 Index rejoices from 70.0% of firms showing better sales than estimated, attention will also be given to any statements ahead of a key trade policy meeting between Chinese and U.S. leaders in South Korea. There are mixed stories on trade with Canada reportedly hit with a new tariff while Japan is said to have strengthened its ties with America. For now, The Buck remains afloat while it has potential to be all over the place as reaction and tone carry the FX narrative for the rest of the week.
What to Watch This Week…
- Fed Meeting and Bank of Canada on Wednesday
- Bank of Japan meeting and ECB on Thursday
- Monex USA Online is always open
GBP ⇓
Sterling has fallen to its weakest level against the Buck since the start of August following negative reaction to a report from the Office for Budget Responsibility. According to the entity, productivity forecasts are likely to be downgraded more than expected, which leaves the Chancellor of the Exchequer in trouble compiling the budget the government is trying to complete. Additionally, U.K. Food costs fell the most in five years, which should make it more comfortable for the Bank of England to reduce interest rates, something they have stayed away from fearing exacerbating price growth. BOE meets on November 6th.
JPY ⇑
The Japanese Yen is gaining ground over the U.S. Dollar as news out of Japan have been characterized by a positive tone when it comes to trade. While having a productive visit from U.S. officials, treasurers from both nations discussed rebalancing the exchange rate and the hopes of intervention. We shall see how it all plays out for Yen as Thursday comes with an important Bank of Japan meeting and presser that could give some guidance over whether monetary policy may loosen.
