CEE: Week Ahead - Turkish CPI, Polish & Czech Rate Decisions

• Wednesday’s session was dominated by the appreciating Japanese Yen, with several factors contributing to the extension of strength this week. First of all, ongoing concerns surrounding the US Government shutdown and uncertainty regarding upcoming data releases have weighed on USDJPY. Secondly, Tankan survey indicated solid business sentiment and earnings in September, likely to increase the odds of an October BOJ rate hike. Thirdly, weaker-than-expected US ADP employment data prompted a bump lower for US yields, providing an additional yen tailwind.
• USDJPY dipped to a low of 146.59 following the US data, extending the pullback from last week’s highs to 2.25%. Subsequently, the pair has found some support and risen back above the 147 handle as we approach the APAC crossover. Potentially assisting the bounce was comments by US speaker Johnson stating he hopes for a shutdown breakthrough today.
• The New Zealand dollar has also been an outperformer across G10, with NZDUSD notably rising back above the significant 0.5800 pivot point. Kiwi’s outperformance has helped stall the topside momentum of AUDNZD, which registered a fresh 3-year high of 1.1418 yesterday. The cross has moved back to 1.1365 today, and support is not seen until 1.1250, the 20-day EMA.
• The Canadian Dollar is among the worst performers in G10 today as USDCAD holds close to recent highs. A breach of 1.3959 would place the pair at four-month highs. Additionally, a number of CAD crosses are at notable technical levels, with CADJPY breaching an important cluster of support and AUDCAD threatening to break above trendline resistance, drawn from the 2021 highs.
• The Swiss Franc also weakened by 0.25% Wednesday ahead of September CPI data due on Thursday. Despite this, EURCHF remains in consolidation mode, respecting the well established and familiar range between 0.93-0.94.
• US jobless claims would be in focus Thursday ahead of NFP on Friday, although the release of the data remains unlikely owing to the current government shutdown.

The United States Senate has rejected a House Republican funding bill for the third time, ensuring the US government will remain shut until at least Friday. There was no change in the vote count, with all Republicans (except Senator Rand Paul [R-KY]) and three Democrats voting in favour of the CR. The vote followed a separate ballot on a Democrat-led funding bill that also failed. Both outcomes were expected. 

• Democrat Senators John Fetterman (D-PA), Catherine Cortez Masto (D-NV), and (Democrat-aligned Independent) Angus King (I-ME) voted in favour of the CR, as they did yesterday.
• Senators Jeanne Shaheen (D-NH), Maggie Hassan (D-NH), and retiring Gary Peters (D-MI), the group that (along with the above and Senate Minority Leader Chuck Schumer [D-NY]) voted to keep the government open in March, again voted against the CR.
• A short time ago, Max Cohen at Punchbowl News reported that Shaheen "says she will continue to vote no on GOP CR [and] thinks she can get a deal that includes an ACA credit fix when the House returns... says she’s in talks with Republicans on this."
• While there hasn't been any movement on the vote tally, a bipartisan group of Senators huddled on the floor for an extended period, which might suggest some informal discussions are underway.
• Senator Peters, one of the above swing votes, and Senator Mike Rounds (R-SD), who has floated a one-year extension to the Obamacare subsidies as a potential offramp, were among the group.
• Burgess Everett at Semafor notes, "From what I could tell one thing beyond discussed on the floor that Dems are wondering if there’s a shorter term CR that could set up quicker negotiations on the ACA subsidies"

• Stocks gaining ahead midday Wednesday, political distractions at bay as focus turns to fundamentals rather than the US Government shutdown as of midnight Tuesday. Additional support for equities could be tied to the Supreme Court denying Pres Trump's demand to fire Fed Gov Cook, allowing her to stay on at least until oral argument on the case is heard in January 2026.
• Currently, the DJIA trades up up 56.81 points (0.12%) at 46453.89, S&P E-Minis up 6.75 points (0.1%) at 6745.5, Nasdaq up 39.5 points (0.2%) at 22698.78.
• Leading gainers ahead midday included Health Care and Utility sector shares, pharmaceuticals leading the former: Regeneron Pharmaceuticals +9.06%, Moderna +8.75%, Biogen +7.67%, Amgen +6.75% and Eli Lilly +6.66%.
• The Utilities sector was buoyed by AES, the energy company surging 16% higher in the first half as wires reported BlackRock's GIP is in advanced talks to purchase the company. Follow-through support for other energy companies includes: Constellation Energy +3.79%, Vistra +3.33%, PG&E +3.18% and NextEra Energy +2.41%.
• Conversely, Materials and Communication Services sectors led decliners by midday. Weighing on Materials: Corteva -7.05%, Ecolab -1.95%, Linde -1.92% and Eastman Chemical -1.53%. Meanwhile, News Corp -5.62%, Interpublic Group -4.12% and Omnicom Group -3.95% weighed on the Communication sector in the first half.