Previous Day's Market Highlights
Reports from Dow Jones that the EU and UK had made progress on Brexit talks, particularly on the Irish border, and that a divorce deal could come as soon as Monday, led the pound to rally in the afternoon session. Sterling-euro hit fresh highs since June and sterling-dollar regained 1.31. UK Brexit Secretary Raab said negotiations with the EU have picked up and that he’s confident of reaching a deal by autumn. There was also a report that a group of 30-40 Labour MPs were prepared to defy Corbyn and endorse a Chequers-style deal.
President Trump’s criticism of the Fed’s pace of hikes—he doesn’t think it needs to be so fast—contributed to dollar softness, although markets continue to expect a fourth hike this year and more hikes in 2019. Elsewhere, Fed member Kaplan said he doesn’t expect a sudden rise in inflation.
The Canadian dollar weakened further against the pound on a fall in housing starts. Sterling-CAD later regained 1.70. The South African rand rallied on the appointment of a new finance minister.
|Currency Pairing||08:00 Today||Vs 08:00 Yesterday||Four-Week High||Four-Week Low||% Change|
Today's Market Highlights
Unchanged or slightly faster Manufacturing and Industrial Production data could offer the pound some support this morning (09:30 BST), particularly if Brexit sentiment remains more positive after yesterday’s reports. We should continue to expect sterling volatility based on the latest headlines until a deal is complete. Monthly GDP may prove softer, which could be a risk for the pound, although more attention continues to be paid to the quarterly readings, and a surprise to the upside could add to sterling support.
In the afternoon, an increase in US Core PPI, as markets look for signs of rising prices to support rate hike expectations, could strengthen the dollar. An increase in Canadian Building Permits could strengthen the loonie but likely won’t be a huge mover.
Today's Economic Calendar
|9:30am||GBP||Industrial Production MoM (Aug)||0.1%||0.1%|
|9:30am||GBP||Industrial Production YoY (Aug)||1.0%||0.9%|
|9:30am||GBP||Manufacturing Production MoM (Aug)||0.1%||-0.2%|
|9:30am||GBP||Manufacturing Production YoY (Aug)||1.1%||1.1%|
|9:30am||GBP||Goods Trade Balance (Aug)||£-10.900B||£-9.973B|
|10:00am||GBP||GDP MoM (Aug)||0.1%||0.3%|
|1:30pm||USD||Core PPI YoY (Sep)||2.5%||2.3%|
|1:30pm||CAD||Building Permits MoM (Aug)||0.5%||-0.1%|
|5:15pm||USD||Fed's Evans Speaks|
|11:00pm||USD||Fed's Bostic Speaks|
|11:30pm||AUD||RBA Assist Gov Ellis Speaks|
|2:00am||AUD||Consumer Inflation Expectations (Oct)||4%|