US: White House Press Conference Underway Shortly
White House Press Secretary Karoline Leavitt is shortly due to brief reporters at the White House. LIVESTREAM As there is little prospect of a resolution to the US government shutdown during a Senate vote on the seven-week funding measure in around an hour, the primary focus for markets in the short-term is on how deeply President Donald Trump and Office of Management and Budget Director Russell Vought will cut the federal bureaucracy. White House Press Secretary Karoline Leavitt told reporters yesterday that layoffs during the shutdown are "likely going to be in the thousands."
- Earlier today, Vought announced on X that he is putting "on hold" USD$2.1 billion in federal grants for infrastructure projects in Chicago, the lastest in string of actions targeting Democratic-led cities and states. So far, Vought actions have been relatively narrow in scope.
- Politico noted this morning that Trump's “White House allies say these narrow moves fall short of the kind of sweeping cuts to the federal workforce and spending that [Vought] has long promised and instead reflect a growing view among some Republicans that policy decisions the administration makes during the shutdown could come back to bite them.”
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EURUSD TECHS: Pullback Appears Corrective
- RES 4: 1.1851 High Sep 10 2021
- RES 3: 1.1829 High Jul 01 and the bull trigger
- RES 2: 1.1789 High Jul 24
- RES 1: 1.1743 High Aug 22
- PRICE: 1.1679 @ 16:35 BST Sep 3
- SUP 1: 1.1574/1.1528 Low Aug 27 / Low Aug 5
- SUP 2: 1.1392 Low Aug 1 and bear trigger
- SUP 3: 1.1373 Low Jun 10
- SUP 4: 1.1313 Low May 30
Despite Tuesday’s sell-off in EURUSD, the trend set-up remains bullish and the pullback appears corrective. Note that the pair has recently pierced key support around the 50-day EMA, currently at 1.1612. A clear break of the average would signal scope for a deeper retracement and potentially expose key medium-term support at 1.1392, the Aug 1 low. Initial resistance to watch is 1.1743, the Aug 22 high. A break of it would be a bullish development.
FOREX: USD Reverts Lower Following Soft JOLTS Jobs Report
- It was a tale of two halves for G10 currency markets on Wednesday, as initial greenback strength reversed and subsequently extended lower following a softer-than-expected US JOLTS jobs report, stoking the softening labour market narrative as we approach Friday’s release of non-farm payrolls.
- The USD index is roughly 0.3% lower on the session as we approach the APAC crossover, with GBP and AUD marginally outperforming while the likes of CAD and CHF remain closer to unchanged on the day.
- Initial sterling weakness saw GBPUSD print a near one month low of 1.3333, however, greater stability for risk and the associated reversal lower for UK Gilt yields helped underpin a solid GBP recovery. Cable rose around 120 pips to 1.3450 amid these dynamics erasing a solid portion of the steep declines from Tuesday’s session.
- For AUD, there was a more resilient tone across the entire session following Australian Q2 GDP coming in stronger than both the RBA and consensus expected. Additional hawkish comments from RBA’s Bullock helped underpin the Aussie rally, which has seen AUDUSD close within close proximity of 0.6569 resistance. Clearance of this level would expose key resistance and the bull trigger at 0.6625, the Jul 24 high.
- Additionally, AUDNZD strength continues to stand out, reaching fresh cycle highs today above 1.1140. A breach of the key 1.1180 mark would place the cross at the highest level since late 2022. Above here, 1.1250 marks a significant 76.4% retracement point of the 2022 selloff.
- USDJPY nicely respected Fibonacci resistance at 149.12, printing a high of 149.14 during early European trade. Following that, waning dollar momentum and the subsequent price action following the US data helped USDJPY eventually back below the 148 handle. Heightened political uncertainty in Japan allows USDJPY to hold onto its 100 pip advance this week.
- Swiss CPI kick starts tomorrow’s calendar before US ADP, jobless claims and ISM Services PMI are released.
OPTIONS: All Call Spread Buying In Rates
Wednesday's Europe rates/bond options flow included:
- ERU5 97.9375/98.00cs, bought for 2 in 20k
- SFIZ5 96.20/96.25cs, bought for 1.75 in 2k
- SFIM6 96.70/96.85cs, bought for 2.75 in 6k
