European FX Open - The USD stays on the back foot

Not much movement, but the USD starts the week a little lower and broadly on the back foot.

This coincides with expectations that the Fed will begin an easing cycle this week with a -25BPs rate cut. However, speculation that Powell and co could be even more aggressive with a -50BPs start refuses to go away and overnight USD/YEN briefly traded below 140.00.

US data watch continues today with Empire manufacturing followed by Tuesday's retail sales and IP, with housing data releases also coming before Wednesday's huge interest rates verdict.

The big headline at the start of the week though is news that Donald Trump is 'safe and well' after what the FBI says 'appears to be an attempted assassination' on the former president at his Florida golf course. BBC News also report the suspect (already identified as being deeply involved in efforts to get foreign fighters into Ukraine to battle against the Russian Army) was spotted by a Secret Service agent with an AK-47-style weapon.

As an ABC News/Ipsos poll shows presidential rival Harris won last week's debate to little effect, with her lead over Trump stuck at about 52%-46% among likely voters, political analysts wait to see whether the second attempt on Trump’s life could again reset the race after some criticism over his plan to raise tariffs on US imports and his campaign's latest comments on migrants.

Today, there is ECB speak courtesy of Panetta, Guindos and Lane. Ahead, Wunsch remarked the Bank’s base case should allow for further rate cuts but he pointed to faster services inflation as a potential risk, while Nagel said he’s 'fairly sure' that 2% inflation will be achievable by the end of 2025.

Norway, Italian and EMU trade data will be released through the morning as well as latest Swiss SNB sight deposits and EMU Q2 labour costs, which came in at 5.1% y/y last time out.

Meanwhile, in the UK Rightmove said asking prices for UK houses jumped 0.8% in September, double their long-term average pace, but less positively a group of leading economists has told Chancellor Rachel Reeves to rip up her fiscal rules at the October budget in order to borrow more to invest in the country’s ailing public infrastructure.

Elsewhere, the US stock futures are little changed amid Bbg reports that pressure is growing on the Chinese admins to quickly ramp up fiscal and monetary stimulus to hit this year’s growth target of around 5%. We touched on the subject late last week and the data we identified for Saturday both missed expectations, with IP and retail sales coming in at 4.5% y/y and 2.1% y/y respectively. The former marked its longest slowing streak since 2021 in August.

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