Dollar, Yen Firm on Euro Debt Concerns

NEW YORK ( BBH FX Strategy) -- The dollar and yen maintained a supportive tone amid the combination of global growth concerns and eurozone debt concerns. Europe's Stoxx 600 equity index is showing a 1.7% net loss ahead of the North American open, extending Friday's correction of the big gains seen in the early part of last week. The MSCI Asia Pacific index fell by 2.7% and U.S. equity index futures are point to a negative open on Wall Street.

Although China's PMI held up better than expected, today's European data mostly painted a more worrisome picture, increasing demand for safe havens. Today's Economic and Financial Affairs Council meeting will give further opportunity for discussion about a possible extension or leveraging of the European Financial Stability Facility. Oil below $80 bbl and three-month copper on the LME down as much as 5.5% to $6,635 a tonne, the lowest since July 21, 2010, and down nearly 30% this year.

This week in the U.S., eurozone and UK policy and data will on again be in focus, along with key developments in technical indicators. In Europe many are likely to be focused on the policy front with the potential for policy shifts from the European Central Bank and Bank of England.

Elsewhere, many will focus on U.S. data with Institute for Supply Management and nonfarm payrolls expected to be the closely watched. And while the ISM may provide a boost to sentiment based on the readings from the Chicago PMI print, payroll growth may be negligible when you strip out 45,000 Verizon workers who returned to work at the end of August. Adjusting for those workers, payroll growth is likely to have been unchanged or might have even fallen.

In EM markets this week, the markets are likely to focus on central bank meetings in Poland and Peru, which are slated to meet Oct. 5 and Oct. 6. Neither are expected to change rates, but they could start preparing the markets for eventual easing by laying out a more dovish forecast framework.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.