UK Inflation dominated Sterling price

Last week, we had key events from the UK, Eurozone and United States. Firstly, the pantomime with US politics suggested that it was curtains for Republican Donald Trump. According to economists’, Trump lost the third and final debate after suggesting that the election is fixed and he will not commit to accepting the results if he loses. Clinton called the remarks “horrifying” and said he was “taking down our democracy”. Bookmaker Paddy Power last week paid out more than $1 million on bets that Clinton would win the race to the White House. The Polls demonstrates a 51% to Clinton and 41% to Trump after the third and final debate which took place last week. The next big election will take place on November 8th 2016.

Last Thursday was a Draghi day as the ECB President announced the central bank’s latest monetary policy decision followed by a Draghi led press conference. Markets before the event were looking for confirmation that the ECB will extend its asset purchasing programme beyond March next year, although these hopes were squandered as Draghi stated that the matter was not even discussed at the latest meeting. Draghi also stated that an abrupt ending to bond purchases is unlikely and was also not discussed. Monetary policy was also left unchanged. The Euro strengthened drastically against the Greenback during the conference before moving lower to the pre-conference levels.

UK Inflation dominated Sterling price action earlier in the week. The consumer price index rose to 1% in September, its highest level since November 2014. The Pound rose nearly 1% against the Euro and half a percent against the Greenback, bucking the Sterling trend of late. However, economists’ are still forecasting the Bank of England to cut the main benchmark rate to a record low of 0.1% at November’s policy meeting. 

Monday 

We start the week with a raft of Eurozone date released, including services and manufacturing PMI’s. A reading above 50 indicates expansion and below contraction. We also have a couple of Fed speakers in the afternoon including Bullard and the hawkish Dudley. The main news comes from the UK as Prime Minister Theresa May holds Brexit talks with the devolved nations (Nicola Sturgeon, Carwyn Jones and Arlene Foster).

  • Eurozone Services PMI: 53.5
  • Eurozone Manufacturing PMI: 53.3
  • FOMC Member Dudley Speaks
  • FOMC Member Bullard Speaks

Tuesday 

Tuesday starts with a piece of high tier data from Eurozone’s powerhouse; Germany. German Ifo Business Climate rates the level of current business conditions according to surveyed companies including manufactures, builders, wholesalers and retailers. In the afternoon, the US post their consumer confidence reading. Finally, late in the European session we have BoE Governor Mark Carney and ECB President Mario Draghi speaking in London and Berlin respectively.

  • German Ifo Business Climate
  • US CB Consumer Confidence
  • BoE Gov Carney Speaks
  • ECB President Draghi Speaks

Wednesday

Wednesday’s economic docket is relatively light with the only notable piece of data released from the States. US new home sales is forecasted to tick slightly lower than last month to 601k as the housing industry continues its decent run of form.

  • US New Home Sales

Thursday 

UK’s first reading of Q3 GDP is released Thursday morning. Economists’ forecast that this will drop 0.4% from Q2’s 0.7%. This is the first post-Brexit GDP data released, which is why the GDP is forecast to post its worst reading in over a year. In the afternoon the US release their durable goods figure and unemployment claims reading, both expected to improve.

  • UK GDP
  • US Core Durable Goods
  • US Jobless Claims

Friday

We finish the week with one piece of high tier data from the US. The States post their first reading of Q3 GDP, which is expected to increase rapidly to 2.5% from last quarter’s 1.4%. Arguably this is the week’s most important statistic, with the reading forecast to rebound from US’s poor first half performance.

  • US GDP