Talking Points

US Dollar Recovers, Yen Declines as Markets Digest Yesterday’s Volatility
Quiet European, US Economic Calendar Keeps All Eyes on Washington DC
Fed-Speak in Focus to Gauge Impact of US Budget Impasse on QE “Taper”

Financial markets were in corrective mode in overnight trade. The US Dollar mounted a cautious recovery after posting the largest daily drop in nearly three weeks over the preceding 24 hours. Meanwhile, the Japanese Yen declined as the Nikkei 225 advanced, sapping demand for the safety-linked currency. Japan’s benchmark stock index plunged 1.2 percent yesterday to hit the lowest level in five weeks.

This brief respite seems unlikely to last however as continued deadlock over US budget policy drives worries about the implications of fiscal retrenchment in the world’s largest economy on global growth. Indeed, a relatively quiet data docket in European and US hours will keep the spotlight firmly pointed at Washington DC.

S&P 500 futures are trading flat for the time being, pointing to a lack of conviction behind risk appetite trends for the time being. The situation remains fluid however, meaning an unexpected headline pointing to a breakthrough in Congressional negotiations or signaling deepening deadlock may quickly change the sentiment landscape.

A dose of “Fed-speak” represents a wildcard. Cleveland Fed President Sandra Pianalto and Philadelphia Fed President Charles Plosser are scheduled to speak. While neither is currently voting members of the policy-setting FOMC committee, both sit in on its meetings and may thus offer some valuable insight as traders attempt to nail down the timing of the first cutback in QE asset purchase. Commentary that touches on the impact of the US government shutdown on stimulus reduction plans ought to be particularly market-moving.

Get Real-Time Feedback on Your Trades with DailyFX on Demand!

Asia Session:

GMT

CCY

EVENT

ACT

EXP

21:00

NZD

NZIER Business Opinion Survey (3Q)

–