Powell Set For a Pause?

The dollar weakens after dovish comments from Fed chair Powell cast doubt on the path of monetary policy tightening.

Previous Day's Market Highlights

Sterling gave up most of its earlier gains and traded broadly flat on the day after the Bank of England warned that Britain risks a bigger hit to its economy than the financial crisis if it leaves the European Union in a “disorderly” manner. Carney warned that Britain could see its worst economic slump since World War II. In the worst-case scenario, BOE have predicted that the economy will shrink by 8% within a year, and property prices will plunge almost a third.

In addition, at a speech yesterday, Federal Reserve Chairman Jerome Powell said that interest rates are “just below” neutral, a level that neither stimulates nor restrains growth. These remarks differ from Powell’s comments on Oct 3rd – stating that rates were probably “a long way from neutral”. In reaction to this the spotlight will now be on the data being released today to give a clearer indication of future US interest rate policy after markets interpreted yesterday's comments as dovish.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1263 1.1506 1.1194 2.71%
GBP/USD 1.2825 1.3175 1.2723 3.43%
EUR/USD 1.1385 1.1500 1.1275 1.96%
GBP/AUD 1.7502 1.8148 1.7494 3.60%
GBP/NZD 1.8641 1.9648 1.8612 5.27%
GBP/CAD 1.7000 1.7285 1.6784 2.90%

Today's Market Highlights

The main highlight today will be from the US with Core PCE inflation released at 13:30, forecast to remain at the Fed's target level of 2%. Following this, later in the evening will be minutes from the Fed's November meeting. Both releases will be closely watched as investors look to gauge the pace of monetary tightening going into 2019.

Other data of note is of lesser significance including UK net lending figures and the Canadian current account. After ECB President Draghi's speech was cancelled this morning, there are no central bank speakers slated for today.

Today's Economic Calendar

Time Currency Release Consensus Previous
1:30pm USD US Core PCE Price Index (y/y) 2.0% 2.0%
7:00pm USD FOMC Meeting Minutes