Intraday Market Thoughts

Dollar Shifts Higher as Washington Wrangles

by Adam Button
Sep 27, 2013 2:41

The market is struggling for direction as Washington grapples with the budget and the debt ceiling. The dollar was the top performer alongside NZD while the yen lagged. Next up is Japanese CPI.

Congress is facing two deadlines: on Monday a government shutdown begins due to the lack of a budget while around Oct 17 the government will hit the debt ceiling. Republicans are trying to use both measures to fight Obamacare while Democrats are refusing to negotiation, gambling the public would blame their counterparts for any economic impact.

With politicians willing to sacrifice the economy to win elections, there is no telling what will happen but most observers expect along with some last-minute drama. The anxiety could weigh on markets in the day ahead.

Economic data was upbeat Thursday but the market was skeptical. Initial jobless claims improved to 305K compared to 325K and the BLS said there were no special factors. In the previous two weeks, a lack of reporting from California pulled down the reading.

US Q3 GDP was unrevised at 2.5%. The Fed's Stein also said tapering was a 'close call' and that indicates a potential taper in Oct or Dec.

In Asia-Pacific trading the focus will be on Japanese August CPI. The national reading is expected up 0.8% y/y but down 0.1% excluding food and energy. The soft inflation readings give the BOJ plenty of cover to expand QE but so far they are planning to wait and see how previous actions filter through.

Some non-Asian events also take place. First, at 2305 GMT, the UK GfK consumer confidence report for Sept is expected to improve to -11 from -13. Later, at 01015 GMT, the Fed's George speaks about the economy.

At 0130 GMT, China releases YTD industrial profit data. Through July, profits were up 11.1%.

Act Exp Prev GMT
National CPI (AUG) (y/y)
0.9% 0.8% 0.7% Sep 26 23:30
National CPI Ex-Fresh Food (AUG) (y/y)
0.8% 0.7% 0.7% Sep 26 23:30
Tokyo CPI (SEP) (y/y)
0.5% 0.5% 0.5% Sep 26 23:30
National CPI Ex Food, Energy (AUG) (y/y)
-0.1% -0.1% -0.1% Sep 26 23:30
Tokyo CPI ex Food, Energy (SEP) (y/y)
-0.3% -0.3% -0.4% Sep 26 23:30
Tokyo CPI ex Fresh Food (SEP) (y/y)
0.2% 0.3% 0.4% Sep 26 23:30
GDP (q/q)
2.5% 2.6% 2.5% Sep 26 12:30
GDP Price Index (q/q)
0.6% 0.8% 0.8% Sep 26 12:30
GDP (Q2) (y/y)
1.3% 1.5% 1.5% Sep 26 8:30
GDP (Q2) (q/q)
0.7% 0.7% 0.3% Sep 26 8:30
GfK Consumer Confidence
-10 -11 -13 Sep 26 23:01
Gfk Consumer Confidence (SEP)
-10 -11 -13 Sep 26 23:05
Continuing Jobless Claims (SEP 13)
2.823M 2.840M 2.788M Sep 26 12:30
Initial Jobless Claims (SEP 20)
305K 325K 310K Sep 26 12:30

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