The DXY Index has fully retraced this month’s decline and is facing stiff resistance at 98.5. US and European pharmaceutical stocks have generally shown a muted reaction to US President Donald Trump’s latest tariff announcements, as many have already invested or pledged to invest in US manufacturing facilities. The Fed’s September rate cut did not settle the debate between tariff-led inflation risks and labour market softness, with President Donald Trump relentlessly pushing the Fed for faster and lower interest rates.
Adding the possibility of a government shutdown, which could delay this Friday’s US jobs data release, October is likely to start with data gaps just when the market needs clarity most. Hence, the Conference Board’s consumer confidence index on September 30 could become a proxy for filling the gap. Markets will likely measure this data against last week’s disappointing University of Michigan survey, which showed US households worrying about job security and downside economic risks.
The US government faces a shutdown at midnight on September 30 if the Republicans cannot secure Democratic support for the 60 votes in the Senate to pass the funding bill for the new fiscal year. While a shutdown is not the same as a debt default, a prolonged impasse could still weigh on the USD by slowing growth, disrupting data and markets, and further eroding public trust driven by heightened uncertainty in the domestic and external political landscapes.
Attention may also shift to the European data for near-term direction. Consensus expects Thursday’s Eurozone CPI inflation estimate to rise above the official 2% target in September and Friday’s jobless rate to stay unchanged at its lifetime low of 6.2% in August. If so, the above data should affirm the OIS market’s belief that the European Central Bank’s rate-cutting cycle has paused for the rest of 2025 through 2026. The ECB officials speaking this week should reaffirm that monetary policy decisions are data-dependent and will be made on a meeting-by-meeting basis.
Still, ECB Chief Economist Philip Lane will likely reiterate that the task of returning inflation to target has been mainly completed, without significant risk of recession, to justify further easing. ECB President Christine Lagarde reckoned that headwinds, including higher tariffs, a stronger euro, and increased global competition, would moderate growth for the remainder of 2025 before fading in 2026. Bundesbank President Joachim Nagel may emphasize the need for the EUR to enhance its global role, a view shared by Lagarde. Nagel favours greater integration of European financial markets and believes that Europe’s high level of savings could be better channelled to finance green and digital transactions, as well as defence spending.
Quote of the Day
“I would rather earn 1% off a 100 people's efforts than 100% of my own efforts.”
John D. Rockefeller
September 29 in history
American oil tycoon John D. Rockefeller became the world's first billionaire in 1916.
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