US political situation somehow just got more tense, possibly blocking path to new stimulus round – This could be another source of the US market’s weakness this week. Trump appeared ready to move on new stimulus measures last week, but the death of liberal Supreme Court Justice Ruth Bader Ginsburg on Friday has supercharged the already hyper-partisan atmosphere as Trump and Senate Republicans are moving to quickly nominate and approve Ginsburg’s replacement before the election (court nominees only require a majority approval in the Senate, which is currently controlled 53-47 by Republicans). This has Democrats hopping mad after a Republican majority Senate frustrated Obama’s attempt to nominate a replacement for conservative justice Scalia who died more than eight months before the 2016 election. The situation bears close watching.
The G-10 rundown, express edition
USD – As noted above, the USD showing sigs of reverting to its role as a safe haven and brushing off last week’s post-FOMC meeting move.
EUR – the FT reports on ECB looking a major overhaul of its APP, which is likely to mean more size and flexibility in purchases (read: against former capital key and other rules – sure to eventually see more German/core resistance)
JPY - playing its role as safe haven currency as in so many markets past. The technical situation has taken on added import with the break below 105.00 in USDJPY.
GBP – the UK in a bad place with COVID-19 concerns and risk sentiment shift likely also weighing together with GBPJPY flow. 1.2750 an interesting pivot level in GBPUDS
CHF – the greenback outshining the franc as a safe haven.
AUD – would expect further relative weakness on risk sentiment deterioration and especially if UDSCNY joins in USD comeback here.
CAD – the 1.3250 level is local trigger for an extension higher in USDCAD, with 1.3300-50 a more structurally pivotal area.
NZD – weakening after an incredible attempt at cycle highs in NZDUSD on Friday – have to believe RBNZ will attempt to make new impact and talk up FX risks. NZDJPY coming alive suddenly here.
SEK – the krona rather resilient in not moving more aggressively lower versus the Euro here – could be bottled up by Riksbank tomorrow.
NOK – EURNOK working above local resistance 10.75+ and that’s without much weakness in oil prices. Price action could slip to at least 11.00.
Upcoming Economic Calendar Highlights (all times GMT)
- 1230 – US Aug. Chicago Fed National Activity Index
- 1600 – US Fed’s Brainard (FOMC Voter) to Speak
- 0030 – Australia RBA Dep. Governor Debelle