Credit Agricole

Asia overnight: As investors hope that a change in leadership in Japan will lead to new policies, this continues to boost the Nikkei and drag Asian bourses higher. This positive sentiment was boosted by an upside surprise in China’s trade data. Most Asian bourses and the S&P 500 futures were trading higher at the time of writing. The Antipodean currencies were the biggest movers in the G10 in the Asian session. Despite the RBA deciding to taper its asset purchases, a less upbeat RBA statement weighed on the AUD. The NZD was dragged lower by the AUD. The rest of the G10 was caught in ranges with the CHF and SEK being slight outperformers.

EUR: We expect the EUR to emerge as one of the better-performing currencies this week. In particular, we think that the ECB could unveil a set of upgraded economic forecasts and reduce the pace of its PEPP asset purchases while delaying any discussion about extending its QE beyond March 2022. In turn, this could give both EGB yields and the EUR a boost. We further expect any EUR gains to be more pronounced vs fellow low-yielders like the CHF and the JPY.

On the day, focus will be on the German ZEW for September and the SNB FX reserves data for August. Starting with the former, the consensus expectation is for some moderation in the more important ZEW expectations component and a further improvement of the current situation component. The data should be largely consistent with the slight cooling down of German business sentiment signalled by the recent PMIs and ifo. That being said, to the extent that the ZEW respondents continue to highlight the favourable financial conditions in the Eurozone and the apparent success of the vaccination campaign, the release could corroborate expectations that the ECB will strike a more constructive tone on the economy on Thursday and thus give the EUR a boost.

Natixis

Euro zone: investor morale declined further in September due to another drop in expectations (fourth in a row) amid concerns about new COVID-19 restrictions. Meanwhile, the sub-index of current conditions stayed unchanged. Sentix index declined to 19.6 points after 22.2 points in August. United Kingdom: construction industry has been hit by severe shortages of building materials, with prices rising sharply. The construction PMI fell to 55.2 down from July's 58.7. The composite PMI also fell strongly to a six-month low of 54.9 after July's 59.2.

China: Vice Premier Liu He promised that the government would continue supporting the private sector amid rising fears that a regulatory crackdown was hurting businesses. Also, the market regulator’s head affirmed that the government would continue a policy of solid support for both the private and public sectors. Exports rose by 15.7% YoY in August, and imports by 23.1% YoY, both above expectations.