Market Overview

Dollar stays generally weak today as markets await September FOMC minutes. The key takeaway of that FOMC meeting was that policymakers stick to the plan to raise interest rate one more time this year. And they projected to hike three more times next year. Markets pricing for December hike jumped sharply since then. Fed fund futures are implying 93.1% odds for that. Core inflation projection for 2017 and 2018 were revised slightly lower. But core inflation forecasts for 2019 and 2020 were kept unchanged. The accompanying statement and economic projections suggested that Fed was not too concerned with recent slowdown in core inflation. And that was being reflected in the overall tone of comments of Fed officials so far. Markets will look into more details on how comfortable the policy makers are on inflation outlook. But overall, we're not expecting anything revealing from the minutes.

Dollar is trading generally lower, together with treasury yield, as weighed down by uncertainty over tax overhaul. Dollar index breached 94.14 resistance briefly last week but it's now back at 93.30. Similarly, 10 year yield breached 2.396 resistance last week but is back at 2.345. On the other hand, Euro remains broadly firm as Catalonia risk has eased at least for now. EUR/USD is having 1.1832 near term resistance in sight. This level will be closely watched and break there will probably trigger steeper selloff in Dollar and spread to other pairs.

Euro's rebound continues today as supported by solid German data. There is some uncertainty ahead as Catalan leader Carles Puigdemont is set to address the regional parliament at 1600GMT. For the moment, Catalonia is seen as the major near term risk limiting Euro's strength. On the background, recent comments from ECB officials are affirming the case of the announcement of stimulus recalibration later in the month. Meanwhile, Dollar is clearly losing upside momentum at the point. There is much upside potential for Euro in near term after getting past Catalan risk, one way or the other.

Euro trades broadly higher as lifted by comments from ECB officials that affirm the expectation of some sort of tapering in asset purchases next year. Catalonia remains a risk to the common currency but the case for independence seem to be fading. The risk is taking a back seat for the moment. Meanwhile, Sterling also recovers together with Euro as Prime Minister Theresa May seems to be safe from being ousted for now. Dollar, on the other hand, is trading generally lower together with the Japanese Yen.

Dollar regains some ground as another week starts, rather quietly. Trading could be subdued with US and Canada on Columbus Day holiday today. The greenback weaken before the weekly close last Friday on news that North Korea is preparing to strike another missile that could reach as far as the West Coast of the US. President Donald Trump tweeted again during the weekend, saying that with "agreements violated before the ink was dry, makings fools of U.S. negotiators. Sorry, but only one thing will work!" But Trump didn't go on to explain what is that "only one thing". Last Thursday, Trump also told reporters that a gathering of top military officials represented the "calm before the storm" And he refused to elaborate after be asked to. But judging from the reactions from the markets today, no one will care what those words means unless the intentions are spelt out clearly.

Dollar ended as the strongest major currency last week as economic data released affirmed a December Fed hike. The surprised contraction in non-farm payroll was offset by strong wage growth. However, the greenback pared back some of its gain on resurgence on North Korea risk. On the other hand, the British Pound suffered broad based heavy selling as there were increasing calls for Prime Minister Theresa May to step down, in the crucial time of trade negotiations with the world. In spite of political uncertainties in Catalonia, Euro showed much resilience and ended the week mixed only. North Korea, Catalonia, Theresa May, Japan election, are the key things to watch ahead. Politics might overshadow economic data again.

Dollar spikes higher in early US session even though the headline Non-Farm Payrolls number is a big disappointment. NFP dropped -33K in September, first contraction seen since 2010. That's also much worse than expectation of 77K. However, it should be noted that the figure was skewed heavily by the impact of hurricanes Harvey and Irma. And the markets seem not to be to bothered by it. Unemployment rate dropped to 4.2%, down from 4.4%, lowest since December 2000. Participation rate also increased to 63.1%, up from 62.9%. The most positive surprise is wage growth. Average hourly earnings jumped 0.5% mom. While wage growth could also be inflated by the hurricanes, it beats an also optimistic expectation of 0.3% mom already.

Dollar traders broadly higher today and remains as the strongest major currency for the week. The greenback is boosted by news that US President Donald Trump's administration is finally moving a procedural step on the tax plan. Optimism was also seen in the stocks markets as DOW, S&P 500 and NASDAQ all extended the record runs. Elsewhere, Sterling remains the weakest one for the week as troubled by political uncertainties in UK, and weak economic data. Nonetheless, Australian Dollar is sold off sharply in Asian session after RBA board member Ian Harper said he won't rule out a rate cut.

Fresh, broad based selling is seen in Sterling today and the currency staying as the weakest one for the week. Political uncertainty seems to be a main driver. Talks of UK Prime Minister Theresa May being ousted by her own party members surface. That comes after May's keynote speech at the Conservative Party Conference yesterday. And the occasion was overshadowed by her coughing as a prankster storming the stage.

Dollar trades mildly firmer in Asian session today but there is still no follow through buying in listless trading. The greenback is still limited below key near term resistance levels against Swiss Franc, Yen and Aussie. While the Aussie trades mildly softer after weak retail sales, it's staying as the strongest one for the week so far. Euro is attempting a rebound but the strength is limited by growing tensions in Catalonia. Meanwhile, Sterling was given some support after yesterday's service data. But there is no sign of a sustainable rebound yet.

Dollar remains generally soft today after job data comes in slightly below expectation. ADP report shows 135k growth in private sector jobs in September, slightly below consensus of 140k. Prior month's figure was revised from from 237k to 228k. For the week, the greenback is trading as the second strongest, next to Aussie. But it's pointed out in out earlier report that Dollar struggles to power through key near term resistance against Yen, Swiss Franc and Aussie. Elsewhere, Sterling attempts a recovery after better than expected PMI services but there is no follow through buying seen. In other markets, Gold is trying to regain 1280 after dipping to as low as 1271 earlier this week. WTI crude oil is trying to dry support from 50 after last week's steep selloff.

While major US indices extended their record run overnight, Dollar is lagging behind and is turning soft today. DOW closed up 0.37% at 22641.67, S&P 500 up 0.22% at 2534.58, NASDAQ up 0.23% at 6531.71. 10 year yield jumped to 2.361 but pared gain to close down -0.003 at 2.334. Technically, there are a few points to noted. USD/CHF struggled to stand above 0.9772 key near term resistance. USD/JPY also struggles to take out a medium term channel resistance. Meanwhile, AUD/USD also cannot sustain below 0.7807 key support. It's early to tell if Dollar is completing it's near term rebound, but risk is increasing.

Euro recovers broadly today as markets are looking past the political turmoil in Spain, with focus back on ECB and economic outlook. European markets, except Spain, are steady with Germany on holiday. At the same time, thousands of people protest in Barcelona against police violence during the referendum on Catalonia independence on Sunday. The European parliament will be holding a special session on the issue tomorrow and European commission spokesman Margaritis Schinas urged that "violence can never be an instrument in politics". Elsewhere, Sterling is trading as one of the weakest one today after shockingly bad construction data. Dollar stays firm but struggles to find follow through buying.

US equities surged to new record highs overnight on solid manufacturing data and dollar followed by gaining broadly in Asian session today. DOW jumped 152.51 points or 0.68% to close at 22557.6. S&P 500 rose 9.76 pts or 0.39% to end at 25.29.12. NASDAQ also gained 20.76 pts or 0.32% to 6516.72. 10 year yield was steady, though, failing to take out last week's high at 2.344 but still rose 0.011 to 2.337. While the greenback is clearly stronger against European majors, it's strength against commodity currencies is less apparent. Aussie dips mildly after RBA left interest rates unchanged. But no follow through selling is seen yet below 0.78 handle.

Sterling weakens sharply today as pressured by weaker than expected manufacturing data. Indeed, the Pound performs even worse than Euro, which is troubled by the political tensions in Spain. And, in spite of the early selloff, EUR/USD is holding above last week's low at 1.1716 and no follow through selling is seen yet. Meanwhile, commodity currencies are trading broadly higher, recovering part of last week's loss. In other markets, gold extends recent fall and dips to as low as 1273.7 so far. WTI crude oil also declines sharply and breaches 50.5, comparing to last week's high at 52.86.

Euro opens the week broadly lower as the Catalonian referendum for independence on Sunday turned into chaos. Legally recognized or not, preliminary results show that 90% votes were in favor of independence with a turnout rate of 42.3% (2.3M votes). What shocked the world is that the the peaceful campaign had met with violent suppression of the Spanish government, with brutal attack by the national police (firing rubber bullets, seizing ballot boxes from polling stations, etc). It's believed the violence of the government provoked more "yes" vote for independence.

There were some conflicting movements in the markets last week. Risk appetite was clearly strong in US and Europe. S&P 500 and NASDAQ ended at record highs and DOW was not far from it. Dollar was firm as investors finally got some more details about the long awaited tax reform. Treasury yield also jumped as markets were getting more confident on the bet of December Fed hike. However, the greenback was overshadowed by Swiss Franc, which ended as the strongest one for the week. Dollar was only the second best performer. Yen also ended the third strongest ones. The decoupling of risk sentiments with Swiss Franc and Yen could be partly seen as the results of quarter end position squaring. Or, it's a sign that Dollar strength was indecisive due to lack of confidence over the tax plan.

Dollar weakens pare gains as markets are heading to weekly close. In particular, Swiss Franc has overtaken Dollar's place as the strongest one for the week. Economic data from US are providing little boost for the greenback. Instead, tamer than expected inflation is weighing mildly on Dollar. And traders should be taking profit at quarter end, and ahead of next week's employment data. Meanwhile, some more time is needed to reassess the impact of US President Donald Trump's tax plan, before traders take a more decisive stance. US personal income rose 0.2% in August, spending rose 0.1%, in line with consensus. Headline PCE was unchanged at 1.4% yoy while core CPI slowed to 1.3% yoy. Both were below expectations. From Canada, GDP rose 0.0% in July, below expectation of 0.1% mom. IPPI rose 0.3% while RMPI rose 1.0% mom in August.

Dollar is losing some momentum but it's still likely to end the week as the strongest one. The initial reactions for US President Donald Trump's tax plan were positive. But markets quickly turned into cautious mode as they reassess the situation. DOW gained 0.18% to 22381.20 overnight, but stayed below 22419.51 record high made last week. S&P 500 ended at new record at 2510.06 by was kept below Thursday's high as 2511.75. 10 Year yield opened sharply higher and jumped to as high as 2.344, but pared back all gains to close flat at 2.309. In the currency markets, commodity currencies are set to end as the weakest ones. Euro, Yen and Sterling could end the week mixed.

Dollar is paring some gains today but it remains the strongest major currency for the week so far. While bond yields remains firm today, the greenback is losing some momentum. Euro and Sterling are trading firmer while commodity currencies remain weak. Released from US, initial jobless claims rose 12k to 272k in the week ended September 23, above expectation of 269k. Continuing claims dropped -45k to 1.93m in the week ended September 16. Trade deficit narrowed to USD -62.9b in August. Wholesale inventories rose 1.0% in August. Q2 GDP was revised up to 3.1% with price index unchanged at 1.0%.