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October is set close as the second worst month of the year for the Pound, as the start of November provides multiple central bank monetary policy updates that could see FX markets swing from one extreme to another in the coming days. Placing runner up only to the referendum month of June, ‘hard’ Brexit fears and the subsequent flash crash in the first week of October plagued Sterling, however a stable performance during the rest of the month may ease fears that the Pound will soon lose reserve currency status.
This week, the greatest event risk comes in the form of US Federal Reserve’s FOMC meeting on Wednesday, as the only central bank to tighten policy in recent years mulls whether to raise rates only six days before Americans choose their next President. While the expectations are low for a rate hike (only 17% compared to December’s 69%) investors will be watching for any further signal that members will vote to hike in December; three members dissented in September, could this month see four?
Away from central banks, Employment data (Non Farm Payrolls and co) released Friday will also impact the Dollar, with markets looking for strong figures to strengthen the case for a December Fed rate hike. The US Dollar Basket Index has retreated slightly from highs of 99 reached last week, although a bounce from three week support to start the week could see the Dollar once again outperform peers.
The Bank of England’s MPC meets on Thursday this week, amid growing speculation that Governor Mark Carney will see out his full eight year-tenure despite reports over the weekend suggesting otherwise. Investors will be hoping for Carney to commit to a course of action before the meeting to ease pressure on Sterling, whilst more PMI figures released on Tuesday (Manufacturing) and Wednesday (Construction) will also be assessed by markets for the strength of the UK economy after last week’s stronger-than-expected GDP figures.
As the ECB doesn’t meet again until December 8, macro data will be the driving force for the Euro this week. Having recovered from 8-month lows reached against the USD last week, this morning’s CPI and GDP data was reported bang in-line with expectations, sending the European currency downwards against both the Pound and the Dollar. Any change from expectations to Unemployment figures released on Thursday may make up for today’s lack of excitement, whilst any surprise developments from central bank peers may also provide movement for the Eurozone currency.
Key data this week (Sign up here to get our daily live macro-calendar)
UK Economic Announcements
09:30 Mortgage Approvals
Intl Economic Announcements
00:50 Industrial Productions (JP)
07:00 Retail Sales (DE)
10:00 CPI, GDP (EZ)
12:30 PCE, Personal Income & Spending (US)
13:45 Chicago PMI (US)
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UK Economic Announcements
09:30 Manufacturing PMI
Intl Economic Announcements
N/A BoJ Interest rate decision (JPN)
01:00 Manufacturing & Non-Manufacturing PMI (CN)
14:00 ISM Prices, Construction Spending, ISM Manufacturing (US)
—
UK Economic Announcements
00:01 BRC Shop Price Index
08:30 PMI Construction
Intl Economic Announcements
08:55 Unemployment (DE)
11:00 MBA Mortgage Applications (US)
14:30 Crude Oil Inventories (US)
18:00 Fed FOMC Rate Decision (US)
—
UK Economic Announcements
07:00 Nationwide House Price Index
12:00 BoE Interest Rate Decision
Intl Economic Announcements
01:45 PMI Services and Composite (CN)
10:00 Unemployment (EZ)
12:30 Jobless & Continuing Claims (US)
14:00 ISM Non-Manufacturing, Factory Orders (US)
—
Intl Economic Announcements
09:00 Services & Composite PMI (EZ)
12:30 Unemployment Rate, Non-Farm Payrolls (US)
Technicals
Technicals
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