USD weaker ahead of Fed and court ruling
What happened overnight
– German court confirms ESM decision to be released Wednesday
– UK reports better-than-expected trade data
The USD is broadly weaker, with the NZD, SGD, and PLN leading the way. EURUSD has recovered from Monday’s setback and tested above Friday’s fourmonth highs of 1.2813 but has so far held below the 200-day moving average sitting at 1.2835. AUDUSD has also recovered most of Monday’s losses, and USDJPY has tested below 78 for the first time since early August. The SGD has rallied to 1.2345 to the USD, pushing the SGD nominal effective exchange rate (NEER) to a new cycle high. We estimate that the NEER is about 1% above the middle of its policy bands. This looks expensive to us given the recent weakness in exports and retail sales. In contrast, USDIDR continues to try to test higher but is being held below 9600.
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Credit Suisse