Forex Market weekly pressing catalysts

Australian Dollar

Aussie data was released at 6:00PM est on Sunday. With disappointing PMI data, Australia has now entered into contraction.

Assistant Governor Kent also spoke. The most recent move in the RBA interest rates came out less than expected. Asst. Gov Kent also confirmed the Central Bank is moving towards a data dependent approach when talking about the path of future rates and size.

Major Chinese indexes also collapsed as Xi Jinping held on tightly to a third term

US Dollar

This mornings US data had a surprise disappointment for PMI's.

The DXY traded in a range of 0.94% overnight and now has come back close to flat. Sentiment in the US dollar has been fairly crowded. It's been the hot trade to buy the USD all year. Back in July, we saw a hefty USD correction. Mainly due to the market taking softening US economic data as a sign the Fed would ease up a bit.

Despite the labor market holding up well in the US, we are seeing things potentially slow. Last week, we also saw slight dovish remarks from the Feds Mary Daly. It would not be a surprise to see the DXY to pullback in the short term to 110.50.

UK Pound

4:30AM EST news for the UK was alarming! In a way, we are not totally surprised by these readings.

After Liz Truss' 45 days in office, she has officially reisgned. Rishi Sunak is now set to be Britains next PM. He comes from a Conservative party background and was also Chief Secretary to the Treasury.

To Trade the GBP, it will be highly important to see how Sunak positions himself as the UK is in a dire situation. Any policy that could bring hope to investors about the economic conditions could have the GBP strengthen.

Yen

Who is winning? It's a tug of war back and forth. Markets have suspected the BOJ/MOF of intervening in the Foreign Exchange Market. USD/JPY plunged 3.5% during the asian session. Traders have been closely trying to catch a change in the BOJs YCC(yield curve control). A catch like this would result in a tremendous amount of Yen strength. Easy money in Japan continues as the Central Bank shows no signs of pivoting on YCC

Yen traders need to keep a close watch on import prices in Japan along with inflationary pressures. A sustained increase in Yen weakness can continue to have inflationary pressures increase inside Japan.

Russia/Ukraine

Russia continues to target cities deeper inside of Ukrainian territory after the Kerch Bridge explosion. Enlistment of troops in Russia has continued as Putin continues to mobilize troops. Markets have priced in a lot of the negative news with the Russia & Ukraine war.

Now the big question, Is a nuke attack possible? Sure, its possible. It would be a suicide mission for Russia & Putin to launch any sort of nuclear missle. Maybe if Putin gets to a point to where he feels cornered and no longer capable of making progress in Ukraine could that potentially happen. Can't rule it out!