Some political news from the weekend that will be in focus when the markets open:
- Tensions in Catalonia are on the rise and political leaders in Barcelona and Madrid remain in a deadlock. The Euro hasn’t suffered much pressure yet, but this is a theme to keep tabs on.
- After counting the 17% “special votes” in NZD, the incumbent National party has lost two seats to Labour and the Greens. Peters (NZ First) has said he will make a decision which party to back to form a coalition government by October 12th.
- Late on Friday there were jitters about a possible NKorea missle test over the weekend which caused some safe-haven purchasing. Nothing happened as of yet, so the markets are likely to undo those positions.
- UK PM May’s position is weakening by the day. Reports say that her Brexit plans have been rejected by France & Germany.
This week will mostly be about FOMC minutes and fedspeak following the surge in average hourly earnings in the latest NFP report. Other market moving events will be Draghi’s speech on Thursday and US Retail Sales/CPI duo on Friday.
USD: the main event will be FOMC minutes, which are expected to provide further details of the central bank’s plan to unwind its asset purchases. But watch out for Retail Sales and CPI as well on Friday, which will be interesting to watch as a confirmation of the jump in wages.
EUR: beyond Draghi’s speech on Thursday, nothing else is worth mentioning.
GBP: markets will focus on industrial production, construction and trade data.
AsiaPac: China opens for business after being absent for a week and will provide Caixin services PMI, trade and foreign investment.
In Australia, the RBA will publish its Financial Stability Review. NAB business confidence and Westpac consumer confidence are tier 2 events that will offer more insight into how the Australian economy is holding up.
Going into the week I will remain bullish on US equities, bearish on GBP & NZD vs. USD.
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