Cabinet on Standby

A sparse economic calendar today means major pairings are likely to remain relatively rangebound with the main highlight being the Fed meeting this evening.

Previous Day's Market Highlights

The dollar weakened on Wednesday after the midterm elections resulted in split power in the US congress. Investors began to nudge back into riskier assets as the Democrats have greater ability to check and limit major initiatives from President Trump. The dollar lost around 0.5% against both the Euro and sterling. This increase in risk sentiment caused a broad rally in US equities, with all major indices gaining around 2%.
 
The kiwi dollar traded flat overnight after the RBNZ kept the main interest rate on hold at 1.75% and left their monetary policy statement unchanged. This comes after a strong employment report on Tuesday, with both the unemployment rate and employment change beating analyst expectations by over 0.5%. The kiwi dollar is currently trading at its best level against sterling since August.
 
Sterling experienced modest gains across the board as rumours of an emergency cabinet meeting this week increased market expectations of a Brexit deal being reached. While any deal would still have to be approved by parliament, increasing signs of a deal being agreed by the cabinet will provide further impetus to sterling over the coming weeks.
 
Other data of note included the Canadian Ivey PMI figures significantly beating expectations (61.8 v 50.9 forecast) as well as US crude oil inventories showing a much higher build than expected, despite this crude prices were largely unchanged.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1450 1.1463 1.1172 2.54%
GBP/USD 1.3120 1.3257 1.2693 4.25%
EUR/USD 1.1437 1.1620 1.1302 2.74%
GBP/AUD 1.8018 1.8735 1.7871 4.61%
GBP/NZD 1.9354 2.0481 1.9338 5.58%
GBP/CAD 1.7207 1.7286 1.6635 3.77%

Today's Market Highlights

A sparse economic calendar today means major pairings are likely to remain relatively rangebound with the main highlight being the Fed meeting this evening. While no change to monetary policy is expected market participants will be focussing on comments in the accompanying rate statement to solidify expectations of a rate increase at the December meeting, as well as the path that monetary policy tightening will take in 2019. Focus for the dollar will also be on the ongoing fallout from Tuesday’s midterm elections.
 
The main focus for sterling will once again lie with Brexit and the ongoing cabinet discussions over the final withdrawal deal. Sterling has strengthened in recent days as prospects for an exit deal increase, with rumours that the deal is “95% complete”. With a deal set to be completed by the end of November, sterling will likely strengthen on any further positive rhetoric.
 
Other economic data is of little significance, including US weekly unemployment claims and Canadian housing starts. Central bank speakers are also limited, with only the ECB’s Draghi and Coeure of note, however neither speech is on monetary policy.

Today's Economic Calendar

Time Currency Release Consensus Previous
10:00am EUR Economic Forecasts
1:30pm USD Initial Jobless Claims 214K 214K
7:00pm USD FOMC Rate Decision 2% - 2.25% 2% - 2.25%
7:00pm USD FOMC Rate Statement