Dollar's selloff continues in Asian session today, in particular against Euro, on political worries rather than economic fundamentals. With less than a week to go until the presidential election on November, latest polls are showing that Donald Trump is catching up with Hillary Clinton. Sentiments seemed to have a sharp turn since FBI was opening up new investigations into Clinton's emails. Dollar index drops to as low as 97.60 so far, comparing to last week's high at 99.12. US equities also staged a sharp decline with DJIA diving to as low as 17940.84 before paring some losses to close at 18037.10, down -105.32 pts or -0.58%. S&P 500 was even weaker, falling to as low as 2097.85 before closing at 2111.72, down -14.43 pts, or -0.68%. Markets will stay volatile with the number of heavy weight events this week and the impact could be overshadowed as new polls come out.
FOMC rate decision is a major focus today but Fed is widely expected to keep interest rates unchanged. Markets are generally expecting Fed to hike interest rate in December. Fed fund futures are pricing in 73.6% chance for that. But the decision would very much depends firstly on incoming data, including this week's October non-farm payroll and the November non-farm payroll. Also, the result of the presidential election will play an important role too. The dollar index should have formed a short term top at 99.11 and focus is now on 97.56 resistance turned support. Break there will confirm this case and target 55 days EMA (now at 96.84). Overall, price actions since 91.91 are looking corrective and are bounded inside a near term rising channel. Some support could be seen at the lower channel line and bring rebound. But sustained break there could pave the way for 91.91/93.01 support zone.
On the data front, New Zealand unemployment rate rose dropped to 4.9% in Q3, down from prior quarter's 5.0%. That's the first sub 5.0 reading since 2008. Employment grew 1.4% qoq, much stronger than expectation of 0.6% qoq. That's also the fourth straight quarter of growth. Labor cost index rose 0.4% qoq in Q3. RBNZ 2-year inflation expectation rose 1.7% in Q4. Meanwhile, Australia building approvals dropped -8.7% mom in September, much worse than expectation of -2.8% mom. The contrast in economic data sends AUD/NZD sharply lower today. The development suggests that rebound from 1.0234 has completed after failing to break through 1.0769 resistance. Bias is back on the downside for 1.0446 support. Break there will pave the way to 1.0234 and below to extend the medium term pattern from 1.1638.
Elsewhere, Japan monetary base rose 22.1% yoy in October, consumer confidence dropped to 42.3 in October. UK BRC shop price index dropped -1.7% yoy in October. Looking ahead, Germany will release unemployment today while Eurozone will release PMI manufacturing final. UK will release construction PMI. US will release ADP employment.