European FX Open - German woes under the spotlight

Not much change from Friday's closing prices, but the broader USD rebound continues into the new week.

The pace of Fed rate cuts are up for discussion again after Friday's much firmer than expected US jobs report.

The big 254k, 4.1% and 0.4% m/m and 4.0% y/y beats prompted some second straight -50BPs rate cuts for November being pared, with famed investor El-Erian saying the Fed needs to renew its focus on its fight against rising prices after September’s surprisingly hot jobs report served as a reminder 'inflation is not dead.'

This week, Fed speak and US data with Thursday's CPI report the likely highlight will be under the spotlight. Today, Bowman, Kashkari, Bostic and Musalem (all after hours) will be the focus.

This session, there is plenty of ECB speak scheduled too, including Lane and Nagel. EUR/USD staying below the psychological 1.1000 ahead after Villeroy latterly said the ECB will 'quite probably' cut rates at its meeting this month.

At the top of the hour, German factory orders for August will be a potential mini-impacter at least. Once again, an underperforming economy is under the microscope and further bad news could be in the offing, with a -2.0% m/m result forecast vs 2.9% the month previous.

Sueddeutsche Zeitung reports Germany expects the economy to shrink by 0.2% in 2024 ahead of Wednesday’s official estimate.

Also early brings Sweden's latest Prospera inflation expectations survey as well as Norway IP/MP followed by the likes of EMU retail sales and the Sentix investor confidence survey and Swiss weekly sight deposits.

Elsewhere, US stock futures are all light in the red at the time of writing despite news that Goldman Sachs have upgraded Chinese stocks to overweight with a 15-20% upside potential if Beijing delivers on policy measures.

BBC News reports Israel has carried out more air strikes in Gaza and the Lebanese capital of Beirut. In Gaza, the IDF says it hit targets throughout the strip, including a hospital it says was used by Hamas fighters and iIn Beirut, there were huge explosions in the southern suburbs. Israel says it hit Hezbollah weapons storage facilities.

In the UK, PM Starmer replaced his top aide Sue Gray as the Labour government tried to win back trust and correct course from what even allies say has been a rocky three months in power (The Times).

And in the US, latest odds on the US presidential contest next month reportedly has Trump to win at 50.4% and Harris 48.4%.

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