Tag Archives: Financenews

GBP begins the week on the back foot, having fallen to its lowest level in five months against the euro last week.

Today is incredibly light on the data calendar with only the EU Consumer Confidence figures due out at 3pm. Confidence is likely to come in weaker than the last month which is no real surprise given the uncertainty on a global level.

There are several important data releases later in the week with potential implications for interest rates.

For the UK this week, we have the Employment & PMI – Manufacturing & Services numbers due tomorrow.

Tuesday is looking like a key day for the Pound, given the release of PMI survey data for October in both the UK and Eurozone. Markets will be keeping a close eye on this data, likely to be favouring the currency belonging to the economy which puts in a better-than-expected performance relative to the other.

Currency markets remain volatile. Concerns that the current Israel-Hamas conflict may widen out into a broader regional crisis continue to dominate the markets, and on the back of this we are seeing the US dollar benefit significantly, as well as other safe haven assets. 

Yesterday’s macro calendar was heavily focused on the United States. There were some mixed findings in terms of data. The weekly unemployment claims figure came in somewhat higher than expected.

The main emphasis of yesterday’s US macro diary was Fed Chair Powell’s speech at the Economics Club of New York. His remarks were mainly neutral in tone. They imply that a rate hike in November is unlikely.

Powell did, however, indicate in the Q&A that he did not believe policy was overly tight at the present. Overall, his words support the idea that interest rates would remain higher for longer.

The announcement of lower-than-expected UK retail sales for September this morning has offered a negative start to the day for sterling. The rest of today’s macro schedule is quite calm on both sides of the Atlantic.

Markets anticipate that the UK’s inflation figures increase the possibility that the Bank of England will raise interest rates by the beginning of 2024.

Core CPI inflation, which provides a more accurate indication of domestic inflationary pressures, increased by 6.1% y/y in September, beating forecasts for a decline to 6.0%. (This is down from 6.2% in August.)

Many believe that the Bank of England will be particularly concerned about the rise in services inflation because policymakers have indicated concern about the durability of inflation in the economy’s largest sector.

Today’s macro diary focuses on the United States. The weekly jobless claims, existing home sales for September, and the regional Philly Fed survey for October are among the data highlights.

Meanwhile, Fed Chair Powell’s remarks to the Economic Club of New York will be watched closely.

The Office for National Statistics (ONS) issued data earlier this morning showing that the UK’s inflation rate stayed at 6.7% in September.

Several analysts had estimated that the headline Consumer Price Index (CPI) measure would decline slightly to 6.6% from August. However, the release had no influence on sterling in early trading.

US retail sales increased by 0.7%, exceeding the forecasted 0.3% increase. A crucial indicator of core retail sales for the control group increased by 0.6% M/M.

Despite the hardening of US market rate expectations, the dollar was not in the ascendancy in terms of currency. Instead, the euro was maintaining its stability. Looking ahead today remarks from a number of Fed speakers will be watched closely.

The major currency pairs remained closely range-bound. The sluggish price movement on the markets was probably caused by a scant data schedule. The dollar moved very slightly lower, which is one of the few changes worth noting. 

UK average earnings figures had already published below estimates today. In the three months leading up to August, wages increased by 8.1% Y/Y (vs.+8.3% Y/Y) Following the news, hopes for a UK rate increase have slightly weakened. 

Market statistics like the unemployment rate. The US industrial production, September retail sales, and the German ZEW survey are all due later today. Numerous Fed officials’ comments will certainly get notice.