The U.S. dollar is modestly lower across the board to start the week.
Asian equity markets sold-off, driving demand for the Swiss Franc and the Japanese yen as a safe-haven.
This morning’s economic docket will do little to help the help American equities that are expected to open lower again today. U.S. retail sales rose less than forecast last month. The value of overall sales rose only 0.1% in September, missing estimates of a 0.6% expansion. The print was not all doom and gloom as the so-called control group that excludes more volatile sales climbed slightly more than expected. A separate report showed that manufacturing in New York ticked higher in the month of October.
There is plenty on this week’s economic calendar to keep us busy. Tomorrow sees the release of Industrial production followed by housing starts on Wednesday morning. The FOMC’s minutes of its latest interest rate decision will cross the wire on Wednesday afternoon. Traders will look for signs to possibly coalesce around the idea that the Fed will raise interest rates for a fourth time at its December meeting. Odds currently stand at 79%. The Philly Fed on Thursday and existing home sales on Friday will round out the busy week.
The Japanese yen flexed its safe-haven status overnight, gaining half a percent against the U.S. dollar and pushing higher against most of its rivals. Global equities started a massive sell-off last week only to take a breather on Friday. However, equity boards are awash in red again this morning, increasing demand for the yen. China’s Shanghai Composite is at its weakest level since the end of 2014 and American futures point to a modestly lower open.
Increased tensions between the United States and Saudi Arabia over the disappearance and possible murder of journalist Jamal Khashoggi could put further downward pressure on risk appetite.
The sterling’s roller coaster continued as hopes of an imminent Brexit deal were dashed again. The sterling started trading by popping higher against the U.S. dollar but quickly gave up those gains as talks between the EU and the UK reached another stalemate regarding the Irish border. There is no little hope a deal will be reached before an EU summit on Wednesday.
Expect GBP/USD to continue to trade with the prevailing headlines with increased downside risks to the sterling as the month progresses if a deal is not reached.