FX Update: Strongest themes getting overdone?

The macro calendar for the week ahead is fairly quiet, with interesting bits and pieces, however.

• Today, we get a look at Poland’s Sep. Core CPI reading, the latest US Industrial Production data point and one of the more leading indicators on the US housing market, the NAHB Housing Market survey, which has remained strong relative to pre-pandemic years, but is well off the peak readings of late last year.
• Tuesday:  We have Hungary’s rate decision up tomorrow after the central bank surprised with a smaller than expected the last time around and with EURHUF poised near the top of the range. By the way, a challenger, Peter Marki-Zay, won a primary election to face off against Viktor Orban under the banner of a united opposition in the spring 2022 election. Polls shows the opposition is in a dead heat with Orban’s Fidesz, which has dominated Hungary’s politics for more than a decade and has the country in hot water with the EU over rule-of-law issues. The prospects for a transfer of leadership could have considerable influence on HUF in coming months of the polls begin to tilt in favour of the opposition. Also up tomorrow are US September Housing Starts and Building Permits.
• Wednesday: China to make a decision on rates, with no signs that the PBOC is climbing down from its tight monetary policy. The UK CPI is up as the last inflation reading ahead of the November 4^th BoE meeting, with most of a 25-bp rate hike priced in as of today and after Bailey comments at the weekend (see above). We also have the US Fed’s Beige Book, where the anecdotal reporting on the degree of labour shortages and supply chain issues could make for interesting reading. Canada’s September CPI is up as the market is pricing BoC liftoff for as early as January of next year, with higher odds at the April meeting.
• Friday: UK Sep. Retail Sales and the global flash October PMI’s, including those that get the most attention from the market in Europe.

Table: FX Board of G10 and CNH trend evolution and strength
As noted above – the JPY reading is at a remarkable extreme – has the market overplayed its hand there in the near term, given that it is coming with the JPY near all-time “real effective exchange rate” lows? Elsewhere, note gold losing altitude badly late last week.

Table: FX Board Trend Scoreboard for individual pairs
Little new of note here as we watch whether new USD downtrend flips hold, like in AUDUSD, NZDUSD, USDCHF and GBPUSD.

Upcoming Economic Calendar Highlights (all times GMT)

• 1200 – Poland Sep. Core CPI
• 1215 – Canada Sep. Housing Starts
• 1315 – US Sep. Industrial Production / Capacity Utilization
• 1400 – US Oct. NAHB Housing Market Index
• 1430 – Canada Bank of Canada Q3 Business Outlook
• 0030 – Australia RBA Meeting Minutes 1620 – US Fed’s Williams (voter) to speak