Forex: Dollar Eyes Fed-Speak, Impact of US Fiscal Woes on QE Taper Key

Talking Points

• US Doller Recovers, Yen Declines as Markets Digest Yesterday’s Volatility
• Quiet European, US Economic Calendar Keeps All Eyes on Washington DC
• Fed-Speak in Focus to Gauge Impact of US Budget Impasse on QE “Taper”

Financial markets were in corrective mode in overnight trade. The US Dollar mounted a cautious recovery after posting the largest daily drop in nearly three weeks over the preceding 24 hours. Meanwhile, the Japanese Yen declined as the Nikkei 225 advanced, sapping demand for the safety-linked currency. Japan’s benchmark stock index plunged 1.2 percent yesterday to hit the lowest level in five weeks.

This brief respite seems unlikely to last however as continued deadlock over US budget policy drives worries about the implications of fiscal retrenchment in the world’s largest economy on global growth. Indeed, a relatively quiet data docket in European and US hours will keep the spotlight firmly pointed at Washington DC.

S&P 500 futures are trading flat for the time being, pointing to a lack of conviction behind risk appetite trends for the time being. The situation remains fluid however, meaning an unexpected headline pointing to a breakthrough in Congressional negotiations or signaling deepening deadlock may quickly change the sentiment landscape.

A dose of “Fed-speak” represents a wildcard. Cleveland Fed President Sandra Pianalto and PhiladelphiaFed President Charles Plosser are scheduled to speak. While neither is currently voting members of the policy-setting FOMC committee, both sit in on its meetings and may thus offer some valuable insight as traders attempt to nail down the timing of the first cutback in QE asset purchase. Commentary that touches on the impact of the US government shutdown on stimulus reduction plans ought to be particularly market-moving.

Asia Session:

GMT	CCY	EVENT	ACT	EXP	PREV
21:00	NZD	NZIER Business Opinion Survey (3Q)	38	-	32
23:01	GBP	BRC Sales Like-For-Like (YoY) (SEP)	0.7%	2.0%	1.8%
23:01	GBP	RICS House Price Balance (SEP)	54%	45%	41%
23:50	JPY	Current Account Total (¥) (AUG)	161.5B	520.0B	577.3B
23:50	JPY	Adjusted Current Account Total (¥)(AUG)	351.8B	634.1B	333.7B
23:50	JPY	BoP Current Account Balance (YoY) (AUG)	-63.7%	18.1%	-12.9%
23:50	JPY	Trade Balance - BOP Basis (¥) (AUG)	-885.9B	-880.0B	-943.3B
0:30	AUD	NAB Business Confidence (SEP)	12	-	4
0:30	AUD	NAB Business Conditions (SEP)	-4	-	-7
0:30	AUD	ANZ Job Advertisements (MoM) (SEP)	0.2%	-	-2.0%
1:45	CNY	HSBC/Markit Services PMI (SEP)	52.4	-	52.8
4:30	JPY	Bankruptcies (YoY) (SEP)	-11.92%	-	-15.30%
5:00	JPY	Eco Watchers Survey: Current (SEP)	52.8	52.0	51.2
5:00	JPY	Eco Watchers Survey: Outlook (SEP)	54.2	50.9	51.2
5:30	AUD	Foreign Reserves (A$) (SEP)	53.0B	-	55.7B

Euro Session:

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
5:45	CHF	Unemployment Rate (SEP)	3.0% (A)	3.0%	Medium
5:45	CHF	Unemployment Rate s.a. (SEP)	3.2% (A)	3.2%	Medium
6:00	EUR	German Trade Balance (€) (AUG)	13.1B (A)	16.2B	Low
6:00	EUR	German Current Account (€) (AUG)	9.4B (A)	14.2B	Low
6:00	EUR	German Imports s.a. (MoM) (AUG)	0.4% (A)	0.3%	Low
6:00	EUR	German Exports s.a. (MoM) (AUG)	1.0% (A)	-0.8%	Low
7:15	CHF	CPI (MoM) (SEP)	0.2%	-0.1%	Medium
7:15	CHF	CPI (YoY) (SEP)	-0.1%	0.0%	Medium
7:15	CHF	CPI - EU Harmonized (MoM) (SEP)	-	-0.4%	Low
7:15	CHF	CPI - EU Harmonized (YoY) (SEP)	-	0.4%	Low
7:15	CHF	Retail Sales (Real) (YoY) (SEP)	-	0.8%	Low
8:00	EUR	Italian Deficit to GDP (YTD) (2Q) (2Q)	-	7.3%	Low
10:00	EUR	German Factory Orders s.a. (MoM) (AUG)	1.0%	-2.7%	Medium
10:00	EUR	German Factory Orders n.s.a. (YoY) (AUG)	3.9%	2.0%	Medium

Critical Levels:

CCY	SUPP 3	SUPP 2	SUPP 1	Pivot Point	RES 1	RES 2	RES 3
EURUSD	1.3476	1.3524	1.3552	1.3572	1.3600	1.3620	1.3668
GBPUSD	1.5898	1.5984	1.6040	1.6070	1.6126	1.6156	1.6242