The dollar and yen fumbled in overnight trading as the market reversed the moves from Friday and then some, with all of the uncertainty from Trump’s virus infection being put behind and US stimulus talks appearing to move closer to some compromise.
On the latter, we still may not get something before the election but the continued day-to-day talks are still stirring up some positive sentiment in the market for now.
Major currencies are so far little changed, with the aussie getting a brief spike above 0.7200 as the RBA left its cash rate unchanged but is back down to 0.7185 currently.
There isn’t much in terms of data releases today but we will be hearing from the likes of Lagarde and Powell so that may keep things interesting before the market will look towards Capitol Hill once again for any signs of further stimulus progress.
0600 GMT – Germany August factory orders data
Prior release can be found here. This is now a bit of a lagging indicator as we have seen from the manufacturing PMI that factory activity has rebounded quite strongly in Q3, so that should also be reflected in the industrial orders data today.
0730 GMT – Germany September construction PMI
Prior release can be found here. A general indication of German construction activity, which has been keeping more steady in the rebound phase but much like there will be more question marks surrounding that once the catch-up phase loses steam and the focus turns towards new work – which may not be as robust as in the past.
0830 GMT – UK September construction PMI
Prior release can be found here. A similar outlook can be applied here as it is for the German construction activity above, whereby a catch-up in delayed projects will help to provide some relief for construction output/activity for now but that will start to see the recovery lose steam once the focus turns towards new work instead.
0830 GMT – Australia releases its latest government budget
The usual budget timing for Australia is some time in May but this year, everything has been thrown off schedule because of the virus crisis. The budget deficit is expected to hit around A$200 billion with the key item to be income tax cuts to aid the recovery in households and spending. There should also be special provisions made for businesses in writing-off assets and also creating an allowance to claim tax deductions, but no firm commitments have been made as of yet. The government could even resort to cutting the corporate tax rate but we’ll see. That said, it remains to be seen if all this would be enough to guide the economy towards a path of a stronger recovery.
0835 GMT – ECB president Lagarde speaks in an online event
Lagarde will be speaking in the WSJ’s virtual CEO Council Summit where she is expected to speak for about 25 minutes on “Europe’s economic recovery”. The speech will involve the outlook towards the economy and how is the ECB dealing with the virus crisis in general, so expect some policy remarks to squeeze through.
There will be more Fed speak and ECB speak later in the day but I’ll outline them in a separate post afterwards. That’s all for the session ahead, I wish you all the best of days to come and good luck with your trading! Stay safe out there.