Francesco Pesole

The dollar dodged a bullet last night given that the Fed’s Beige Book was largely a non-event. Today the focus is on European PMIs. These are expected to languish near contractionary territory and provide oxygen to the ECB doves who now think the policy rate may need to go below neutral. Expect the euro to stay offered. Hungary’s forint looks fragile too

Donald Trump's marginal lead in opinion polls and strong US data should keep the dollar bid until Friday

The proximity to the US election can favour more deleveraging in FX, raising risks that less liquid currencies will face the pressure reserved for Trump-risk proxies. The US macro calendar picks up with September job opening data today. Reversing the August jump is a necessary, but perhaps not a sufficient condition to temper the dollar momentum

Growth figures for 3Q are published in the US and eurozone today. German CPI is also expected to have re-accelerated, but the impact on the euro may be limited. In the UK, Chancellor Reeves announces her long-debated budget. Sterling is pricing in no risk premium, suggesting downside risks, but our baseline is a cautious budget and limited market impact

It’s been busy in FX markets with surprisingly strong 3Q growth in Europe and an aggressive tax-and-spend budget from the UK Labour government. Eurozone rates and the euro could stay more supported today on the flash Eurozone CPI number, while the US could also see some sticky inflation data. It looks a mixed environment for the dollar, GBP looks fragile

Image Source: Unsplash Sterling and gilts took a hit yesterday, but we don't think the content of the UK budget and market conditions mean

Consensus and markets are aligned for a 50bp cut

The US election result will get mixed up with central bank announcements this week

Image Source: Unsplash Markets are seemingly scaling back some Trump trades, and we suspect the next two days can see some abnormal swings

Within 24 hours we may or may not know the identity of the 47th president of the United States. FX options markets have priced in a respectful level of exceptionally high volatility over the coming week. Results should start to come in around 03/0400 CET tomorrow morning. Only a Red Sweep outcome can probably add to the dollar’s upside.