UK FISCAL: Chancellor Seeks To Dampen Pre-Budget Speculation

• After appearing relatively insensitive to rises in front-end rates and oil prices through the first part of September, the dollar looks to have realigned somewhat with these fundamental drivers - likely aided by lingering concerns around AI buildout/development. Despite today’s strength for oil, Brent crude futures remain well shy of prior highs just shy of the $110 mark, and in similar vein, the USD index (+0.25%) remains shy of Monday’s 99.75 peak.
• We have monitored some Japanese yen weakness through the morning, most likely prompted by USDJPY rising through the overnight 154.95 highs and triggering some stops above yesterday’s 155.00 high print. As flagged yesterday, the area between 155.04/23 is the prior breakdown level and this initial resistance has held so far (high print 155.24). However, against the backdrop of rising oil prices/core yields, a further USDJPY recovery should not be ruled out as we approach both the Fed and BOJ decisions later in the week. Above here for the pair, 156.71 is the next topside level of note, the 20-day EMA.
• NZD once again trades on the backfoot, continuing to test below a cluster of July lows at 0.5762. Overnight, retail card spending fell 0.9% m/m to be up 1.1% y/y, the softest annual growth since January. Focus remains on Q2 GDP on Thursday as market participants assess the RBNZ’s potential to pause the tightening cycle ahead. AUDNZD made another cycle high of 1.2387, before settling back towards 1.2360 ahead of the NY crossover.
• UK labour market data was a little mixed, unlikely to have any impact on the MPC this week. That said, GBP has been inching weaker against the USD through the morning and has matched yesterday's 1.3464 low. After breaching initial 50-day EMA support, a second important support lies at 1.3469, a trendline drawn from the Jun 24 low.
• US Weekly ADP and Empire State manufacturing highlight a quiet economic calendar Tuesday.

As noted earlier (SWEDEN: "*SWEDISH VOTE COUNT SEEN COMPLETED THURSDAY, AUTHORITY SAYS" bbg), the Election Authority has stated that it does not expect to conclude its count of early voting ballots submitted close to election day and overseas ballots that did not arrive in time for the initial count until Thursday, 17 September. 

• Anna Nyqvist, Chief of Staff at the Swedish Election Authority, says that with an estimated 300,000 additional ballots to count (a record), the likelihood of a conclusion on 16 September (when the count starts) is slim.
• In 2018, an additional 205,713 ballots were added to the initial total, representing 3.1% of the total. In 2022, this rose to 226,838 ballots equating to 3.5% of all votes cast (and resulting in a change in seat distribution, with the centre-right Moderates gaining a seat at the expense of the centre-left Social Democrats).  
• A total of ~300,000 additional ballots in this election would equate to around 4.6% of total turnout, potentially resulting in a change in seat distribution that could alter the arithmetic on compiling a coalition gov't.
• Aftonbladet reports "The Election Authority does not expect final election results to be available until Sunday, September 20th at the earliest."
• The preliminary count and seat distribution after the 13 September election has the centrist/centre-left/left 'red-green' parties on 176 seats, with the centre-right/right wing Tido agreement parties that formed the gov't of PM Ulf Kristersson for the past four years, on 173. One hundred and seventy five seats are required for a majority. 

"*SAUDIS SAY ALERTS IN MAKKAH TO WARN OF POTENTIAL DANGER" - BBG