Whilst we have seen the currency markets shift we continue to trade within range. The Dollar depreciated as members of the Fed expressed concerns about the prospect of raising rates in 2015, following some softer data trends that are becoming apparent in the US. Meanwhile, on Friday Cleveland Fed’s Mester reiterated her view that the economy is ready for higher interest rates. Looking at the docket, there was some positive news for the US as the University of Michigan consumer survey with the headline index rose and thus essentially reversed its September decline.
Meanwhile, the prospect for raising rates in the UK continues to wane as inflation continues to bump along the bottom by posting a negative reading on Tuesday. This leaves the BoE under no pressure to be raising rates soon as they do not expect inflation to return to 1% until spring 2016.
We have a very quiet start to the week with the bulk of the market’s concern being released overnight. China’s economy grew 6.9% in Q3 GDP, which was a little slower than the 7.0% growth seen in Q2. The market is paying close attention to Fed speakers at the moment to gage sentiment on a potential rate hike in December. FOMC Member Brainard is due to speak this afternoon.
Most of the focus will be on the speaking engagements that BoE Gov Carney and FOMC Chair Yellen are due to deliver. Carney is due to testify on the Bank of England Bill before the Treasury Select Committee in London. Meanwhile, Yellen is due to deliver brief remarks at the Labor Hall of Honor Induction Ceremony, in Washington DC. As heads of their respective central banks the market will been keen to decipher their commentary.
The Bank of Canada are due to release their latest decision on interest rates today with no change expected. As always, the focus will be on the rhetoric following the decision. Meanwhile, on the docket we have the UK’s public sector borrowing numbers.
Probably the busiest day in the market this week. Starting in the UK we have the release of the retail sales numbers which is expected to remain fairly low. The main focus will be the ECB meeting. We are not expecting any announcement of an extension of the QE programme but believe that Draghi will remain dovish in his tone. Finally the weekly release of the jobless claims are due as well.
Eurozone data will be today’s focus following on from Thursday’s ECB Meeting. Due to hit the wires are the PMI services and manufacturing from the Eurozone and Germany. It will be interesting to see if the fallout from Volkswagen will have any effect.