FX: PMIs Paint A Different Picture Of Global Economy

Meanwhile no changes in monetary policy are expected from the Bank of Japan and Bank of Canada but the BoJ could lower its economic assessment. Despite stronger retail sales, weaker than expected UK PMIs kept sterling under pressure. Investors are also growing weary of Brexit negotiations and starting to drive the currency lower.

In the US, House Speaker Pelosi kept the hope alive when she said a package can be passed before the election IF President Trump backs it. However stocks sold off after Treasury Secretary Mnuchin said there are still “significant differences.” In reality, the clock is ticking and with Trump trailing in the polls, Pelosi won’t be too eager to reach an agreement before the election. Equity traders are still very sensitive to stimulus headlines but FX traders have grown numb to the back and forth. Like Europe, virus cases are rising rapidly in the US but states have not imposed many new restrictions which is the key to confidence, spending and growth. Still with less than 2 weeks until the election, volatility could be bigger than usual as investors adjust their exposure ahead of this high risk event.

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