By ForexTime
A combination of economic and political forces could spell fresh volatility for global markets:
Monday, 9th Sept
Tuesday, 10th Sept
Wednesday 11th Sept
Thursday, 12th Sept
Free Reports:
Friday, 13th Sept
Our focus is on FXTM’s USDInd which could be rocked by three heavy-hitting events.
Looking at the charts, the dollar has shed over 5% from its 2024 high due to expectations around lower US interest rates. Fears of a US recession have also empowered bears with prices trading near a yearly low.
Note: FXTM’s USDInd tracks the US Dollar Index. This measures how the dollar performs against a basket of six different G10 currencies, including the Euro, British Pound, Japanese Yen, and Canadian dollar.
With the US jobs report just a few hours away, the USDInd may end this week with a bang!
Still, more volatility could be on the cards next week and here are 3 reasons why:
All eyes will be on the US presidential debate between Donald Trump and Kamala Harris scheduled for Tuesday, September 10th.
Both are expected to debate key economic issues, geopolitics and policies among other topics. It is worth noting that the US election is less than two months away with national polls showing Kamala Harris leading narrowly. This development could add more spice to the upcoming debate which could impact the overall election outcome.
The August US Consumer Price Index (CPI) report on Wednesday, September 11th may heavily influence bets around how aggressively the Fed cuts rates this month and onwards.
Note: This is the final inflation report before the Fed’s September 17 – 18 policy meeting!
Markets are forecasting CPI to rise 0.2% month-on-month in August and cool to 2.6% year-over-year from the 2.9% prior. Regarding the core print, this is forecast to rise 0.2% month-on-month while remaining at 3.2% year-on-year. Markets will be looking for more signs of cooling price pressures which may reinforce bets around lower US rates.
The ECB is widely expected to cut interest rates by 25 basis points at its meeting on Thursday, September 12th.
So, much focus will be on the GDP and inflation forecasts of the staff economists along with President Lagarde’s press conference for fresh insight. With annual inflation in the Eurozone falling to 2.2% in August from 2.6% in the previous month, this supported bets around lower ECB rates.
Note: The Euro accounts for almost 60% of the USDInd weighting. A weaker euro tends to push the index higher and vice versa.
As of writing, traders have fully priced in a 25-basis point ECB cut next week with the odds of another cut by October currently at 45%.
Prices remain under pressure on the daily charts with prices trading below the 50, 100 and 200-day SMA. However, the Relative Strength Index (RSI) is flirting near oversold territory.
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