Data-dependent USD gets durable data this week
It will be a relatively quiet week ahead on the data front for the data-dependent dollar, with Wednesday’s August durable goods orders report the highlight of the week. The report seems unlikely to provide a catalyst for USD recovery or a reassessment of tapering prospects, with our economics team projecting a second consecutive monthly decline in the headline thanks to soft aircraft orders and even non-transportation orders likely to contract for a second consecutive month. There will be several FOMC speakers this week as well, starting with Lockhart, Dudley and Fisher today. Politics will also be a focus as markets watch the progress through the Senate of the continuing spending resolution passed by the House as we approach the September 30 deadline for avoiding a government shutdown. Our base case expectation is that the Senate will pass a bill with provisions to defund health care reform stripped out, and that this will then be approved in the House, avoiding a shutdown but shifting attention immediately to the debt ceiling debate. We think the USD is building a base against the low-yielding CHF and JPY. IMM data released Friday shows speculative accounts lightened up on USD longs heading into the FOMC decision, consistent with the message from our own BNP Paribas FX Positioning Analysis.
Read the full report: FX Daily
BNP Paribas