Next week's cost activity inward EUR could live on influenced yesteryear the final result of the High German federal elections held on September 22...As nosotros argued inward our High German elections preview nosotros await a grand coalition to live on seen equally to a greater extent than favorable for EUR equally it could imply that Deutschland may perish to a greater extent than opened upward to ideas to resolve the Eurozone debt crisis on to a greater extent than sustainable reason similar Eurobonds. At the same time, if the incumbent coalition authorities of CDU/CSU as well as FDP remains inward power, this could live on seen equally largely neutral to slightly negative for the unmarried currency.
Likely attracting the well-nigh attending volition live on the collection of Fed speakers across the week. Given the grade of misjudgment markets seemingly made into this week’s FOMC, investors volition live on looking for answers. Such promise may live on disappointed withal given the speakers (Dudley, Kocherlakota, Lockhart, Pianalto) convey given speeches oftentimes over recent months as well as probable hitting a similar message to Bernanke’s press conference. This much could maintain the cyclical headwinds for the dollar inward house for right away but mainly against higher yielding currencies, piece the USD may perish along to consolidate vs. JPY.
On the information front, markets volition probable focus on the upcoming watch indicators out of Deutschland (ifo) as well as the Eurozone (PMIs). EUR as well as other European currencies stay rattling resilient on the dorsum of steady stream of positive economical surprises seen over recent months. If this continues adjacent week, nosotros intend that the unmarried currency together alongside SEK as well as NOK could stay resilient against USD as well as JPY.
Finally, investors volition facial expression to the September HSBC flash PMI for PRC where markets are looking for a nudge higher on the calendar month to 50.9. Pessimism over the nation of the Chinese economic scheme has subsided to a greater extent than lately subsequently the pickup inward activity inward the belatedly summer. Though farther improvement may back upward the lead chances complex further, nosotros caution against indiscriminate buying. Indeed, nosotros stay cautious on AUD as well as perish along to favor AUDNZD downside.
Valentin Marinov & Josh O’Byrne - Citibank
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