Tag Archives: Marketinsight

Currency markets have begun the week with new data showing that the UK housing market has weakened.

Average UK house prices fell by 5.3 percent in the year to September, the latest report from Nationwide has revealed. On a monthly basis, prices were flat in September.

Later in the morning we have the PMI Manufacturing data for France, Germany, the UK and the EU as a whole.

Markets will pay close attention to these figures for September as the figures have been below the 50 level for some time. In the UK, the earlier ‘flash’ report showed that the manufacturing PMI was below the 50 level for a 14^th consecutive month. The September reading was the second worst since mid-2020, and it is expected the final reading to show a largely unchanged print.

Looking at the week ahead, GBP is likely to remain vulnerable against the Euro in a week that is very quiet in terms of UK data. Pressure remains on the Pound after the last Bank of England policy announcement where rates were left on hold.

Finally, the US government has avoided a federal shutdown after both House & Senate agreed on a short-term funding deal.

A bill ensuring funding until 17^th November received overwhelming support and was signed into law by the US president before a deadline.

Now that the shutdown has been avoided, this week’s key data release – the nonfarms payroll report for September will be closely monitored. The report will certainly be a key input into the Feds decision around whether to raise interest rates in November after September’s pause. 

Last week’s risk-averse tone in market sentiment lingered throughout Europe yesterday. The Eurozone Following last week’s central bank meetings, markets are concerned that official interest rates will remain high for a lengthy period of time. In this context, hawkish words from Fed members yesterday brought little comfort to markets.

Today’s data schedule is quite quiet. The only noteworthy release is September US consumer confidence. The index is expected to dip somewhat. Meanwhile, comments from Fed and ECB officials will be closely watched.

The Chief Economist of the European Central Bank, Lane, will talk shortly. Interest rates may have peaked but are unlikely to be decreased anytime soon, as stated by ECB President Lagarde in her statement to the European Parliament yesterday. Lane will almost surely reaffirm Lagarde’s remarks.

Bowman, a Federal Reserve policymaker, will talk in the US, but remarks she made late last week have already shown that she is one of the country’s rate-setters who believes that rates may need to climb much further.

Yesterday, Risk appetite declined as we processed the hawkish hold by the Fed on Wednesday. While the Fed did maintain its policy, changes to the interest rate dotplot indicate that the consensus expectation is still for one more rate hike this year.

Market pricing had suggested that the Bank of England would raise interest rates by 25 basis points. However, the decision to hold rates was a close call, with five MPC members opting for no change and four voting to increase rates by 25 basis points.

In the meantime, the Bank of England emphasized that if inflation persists, there may be a need for further tightening of monetary policy. The market’s reaction to the BoE’s policy decision resulted in a sharp fall in the value of sterling, although the pound recovered somewhat before the end of the day.

Today, the flash PMIs for September in the United States, the Eurozone, and the United Kingdom will be the key releases to watch out for. These reports will provide important insights into the economic activity and sentiment in these regions.

On financial markets, yesterday was a calm start to what will be a busy week. On both sides of the Atlantic, the macro calendar was thin. Indeed, the only noteworthy announcement was September homebuilder sentiment in the United States. In contrast to recent US data, it fell short of forecasts.

Top-tier releases are sparse in today’s macro data diary. notably, the European Union releases its CPI for August, with projections predicting a 0.6% increase from -0.1% MoM and a 5.3% increase year on year.

Markets are looking forward to Wednesday’s release of inflation statistics, as well as the Bank of England’s policy announcement on Thursday; the pound is predicted to fall further against the euro and dollar this week.

Also, the Fed will issue their interest rate on Wednesday; the current consensus is that the Fed will not raise interest rates, but the outlook remains uncertain.