• USD on a
winning streak: DXY up 10 weeks in a row, 1st time ever
– One
winning streak paused briefly, then carried on; another was followed by 9
consecutive weeks of decline! So we can’t forecast anything from that fact.
– I think
USD has begun a long-term rally, based on monetary policy divergence
• Central
Bank officials emphasize divergent views
– Draghi
says economy weakening, ECB stands ready to do more if necessary
– Fed’s
Dudley and Kocherlakota emphasize risks of US raising rates too early
• Bank of
Canada lowers estimate of long-term neutral level of rates
– Fed and
Bank of England have too, but CAD was hit anyway – maybe because of her
comments that last week’s sharp rise in core inflation was within their
forecast range
– Fall in
CAD may offer a good entry level for new longs, especially vs JPY
• Today:
– Globally:
September PMIs from Markit
– China:
Manufacturing PMI unexpectedly rose slightly, vs expected fall to
50.0. AUD, copper gained as a result
– Eurozone: Germany,
France and overall Eurozone PMIs (manufacturing & service sector) due out.
Germany, Eurozone expected to be lower; could be EUR-negative
– US: Markit
manufacturing PMI, Richmond Fed index, FHFA home price index. Kansas City Fed
President George speaks; she’s hawkish, in contrast to Kocherlakota
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