A busy day with month-end and quarter-end in focus too
The scriptwriters got lazy again..
The rampaging dollar was the big story in trading yesterday as month-end and quarter-end focus is keeping the dollar supportive before the end of September trading today. Citi's model predicts the dollar to outperform - more so against the yen.
As much as the market has shown a rather consistent theme since trading last week for the most part, the kind of trading conditions that month-end and quarter-end brings to the table is one that can be described as complicated and messy.
That's never quite a good thing for traders in general but if there are any big moves at the London fix, then one can expect to fade them in the aftermath.
But in the case for the dollar this time around, it is a tough one. EUR/USD is on the brink of a further breakdown below 1.1600 and USD/JPY is contesting key resistance at 112.00 while we also saw AUD/USD break below short-term support around 0.7220-30.
Meanwhile, GBP/USD still has room to run to the downside as sellers are arguably targeting the 1.3200 level and USD/CHF is up to its highest since April, pushing past 0.9300.
As such, the technical considerations are also going to be key when weighing up the dollar moves but once the dust settles, I'd expect a renewed focus on energy prices and bond yields once again in dictating the state of play in the market.
0600 GMT - UK Q2 GDP final figures
The preliminary report can be found here. Q2 data are a distant memory by now so this isn't one to have much impact whatsoever as the market is more focused on the outlook amid the slowing recovery heading towards Q4 at the moment.
0600 GMT - UK September Nationwide house prices
Prior release can be found here. UK house prices are estimated to tick higher once again, reaffirming stronger conditions in the housing market that are holding up even after the expiration of the stamp duty holiday in June.
0645 GMT - France September preliminary CPI figures
Prior release can be found here. Much like elsewhere in the region, French inflation is estimated to tick higher again this month, reaffirming rising cost pressures in general.
0700 GMT - Switzerland September KOF leading indicator index
Prior release can be found here. The reading measures the future trends of overall economic activity in the Swiss economy.
0755 GMT - Germany September unemployment change, rate
Prior release can be found here. German labour market conditions have shown decent improvement for quite a number of months now and the trend is likely to stay that way although the impact of the furlough scheme still needs to be sorted out in order to get a more accurate representation of the progress made.
0900 GMT - Eurozone August unemployment rate
Prior release can be found here. The jobless rate in the euro area is estimated to tick lower again, reaffirming further improvement in labour market conditions but it'll take time for overall conditions to reflect a more accurate picture so there's that to consider.
1200 GMT - Germany September preliminary CPI figures
Prior release can be found here. The estimates are for German headline annual inflation to hit +4.2% y/y with the EU-harmonised reading coming in at +4.0% y/y. That will just reaffirm further rising price pressures in the country - similar to across the region - though in Germany's case, the VAT reduction in 2H 2020 is also playing a big role in terms of base effects so there is still some 'noise' in the data.
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.
