Currencies ended mixed on Friday, with further dollar strength being contained following the hawkish FOMC outlook, after N Korean politics again intervened, causing renewed Yen strength on all fronts. The Euro was firm as well, assisted by the Eurozone PMI manufacturing which rose to 58.2 in September, up from 57.4 and beat expectation of 57.2. The EU PMI services rose to 55.6, up from 54.7 and above expectation of 54.8. On the other hand Sterling fell hard after UK PM, Theresa May failed to deliver anything new to the Brexit equation apart from extending the divorce process for another 2 years. Buy the rumour/sell the fact was the lesson coming out of her speech. The commodity bloc both climbed a little higher. In other markets, Stocks were unchanged as were Silver and WTI, while Gold squeezed a little higher on the N Korean headlines.
The Euro is a little lower in early Asian trading on today after Germany’s election showed surging support for the far-right party, leaving Angela Merkel scrambling to form a governing coalition. Although she did win a fourth term in office she will now have to build an uneasy coalition to form a government after losing support to a surge by the far-right.
The Kiwi is also lower on Monday after no single party won a majority in an election over the weekend.
The coming week should be busy, although Monday may be relatively quiet, focusing on the German IFO but with little else to provide inspiration aside from some regional US Fed manufacturing data. Tuesday will see the BOJ Minutes, where no surprise is expected, followed later in the day by the UK Inflation Report Hearing and then the US New Homes figures. Wednesday will see the UK Q2 GDP, to be followed by the US Durable Goods and Pending Home Sales, while Thursday will kick off with the RBNZ Interest Rate Decision, to be followed later in the day by the German CPI, the US Q2 GDP and Personal Consumption/Expenditure Index. Finally, Friday will bring the Japan CPI as well as a host of secondary data, and then later we get the German Retail Sales and unemployment, followed by the US Personal Consumption Expenditure index and Spending figures. All up, it would appear that politics will have the greater influence on direction over the next few days. Have a good week.
The levels in this table are a guide only.
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