Foreign exchange markets were quite calm on Monday, as traders bided their time ahead of Tuesday's release of the delayed September US non-farm payrolls data. Some of the main currency pairs are now just below important - and difficult to breach - levels of technical resistance.
Where as many observers now seem to be giving short shrift to the idea that the Fed might proceed with a December start to tapering, economists at Capital Economics were uncertain.
"[...] we are less sure. By that time, Fed officials will have plenty of data showing not only what impact the shut-down had but also how well the economy bounced back in November," they explained.
To justify their view they explained how in their view the US recovery was gathering pace before the shut-down. Neither were they convinced that the new uncertainty created by the short-term fix to raise the debt ceiling would necessarily stay the Fed's hand in December.
From a technical point of view, come Tuesday morning analysts at Commerzbank were explaining to clients that: "EUR/USD has held the initial test of the 1.3670/1.3711 resistance area which we still expect to cap. It is made up of the 2004 high, April 2007 and 2010 highs as well as the January 2013 peak. There is some divergence of the daily RSI [one of the most widely followed guages of very short-term momentum in prices], which depicts a loss of upside momentum. Dips back from here are likely to find some support at 1.3575 ahead of 1.3515."
The euro/dollar ended the day down by 0.10% at 1.3684.
Acting as a backdrop, speaking on CNBC the President of the Federal Reserve bank of Chicago, Charles Evans, indicated that it will probably take "a few" months before the Fed can ascertain whether the economy is strong enough to warrant the central bank starting to taper its purchases of fixed income securities.
Italian industrial production expanded at a 2.0% month-on-month pace in August, versus a forecast increase of just 0.5%.
Prices in the UK capital rose 10.2% or £50,484 to an average £544,232 in October while average prices in England and Wales climbed 2.8% to £252,418, rebounding from a 1.5% decline in September, according to property website Rightmove.
In an interview with SkyNews, on Sunday, Monetary Policy Committee member Ben Broadbent said that the primary objective remains low inflation. The Bank wants to ensure that the recovery does not get choked off by a premature rate hike, he said.
In the case of Cable - as GBP/USD is known in FX markets - Commerzbank added: "[it] is starting to falter just ahead of the 1.6259 current October high - this together with the 1.6302/69 2012 highs and 2009-13 resistance line should act in unison to offer some tough overhead resistance for the market. We find it somewhat surprising that the market remains at this elevated level, but are cautiously bearish at this critical zone. Intraday charts are suggesting one final thrust to 1.6255/90 ahead of failure."
GBP/USD ended the day lower by 0.22% at 1.6172.
Meanwhile in Japan, in its latest quarterly assessment of the economy the Bank of Japan (BOJ) upgraded its assessment of economic conditions in all of the country's nine regions - activity was described as "recovering" in eight of Japan's regions - referencing the improvements seen in employment, income and industrial production.
US Dollar/yen moved only slightly higher despite the above, rising by 0.17% to the 98.20 yen mark.