Although the scale of revival in the labour market continues to bode well for the UK and the US, sluggish consumer price inflation remains a key area of concern for both economies. Against this backdrop, today’s US inflation numbers will be closely eyed to ascertain whether both economies continue hand in hand with regards to inflation, especially after last week’s disappointing UK inflation data. Meanwhile, the minutes of the latest BoE policy meeting released today revealed that two MPC members continued to vote for an immediate rise in the nation’s interest rate.Yesterday, the Euro came under pressure against the majors following media reports indicating that the ECB might consider purchasing corporate bonds in the near future.
Sterling investors largely shrugged off the weak UK public sector net borrowing data as the Pound showed little reaction against the majors this morning. Market attention has now shifted on to the minutes of the BoE’s latest policy meeting scheduled tomorrow for further direction. Traders are anticipated to scrutinise the minutes to gain an insight into the timing of an interest rate rise in the UK.Across the Atlantic, the only notable macro trigger today is the existing home sales report which is expected to show encouraging sales for September. Meanwhile, in the absence of any important economic data in Europe, the common currency is likely to remain supported against the majors following better than anticipated Chinese GDP data for the third quarter.
With a light global economic calendar today, currency markets are unlikely to witness any major volatility. The minutes of the BoE’s latest policy meeting will be keenly scrutinised later this week for more details about the central bank’s future stance, along with the preliminary third quarter GDP numbers scheduled on Friday. In the Euro zone, the soft German producer price inflation report released earlier today has confirmed that the prospect of deflation continues to cause concern.Across the Atlantic, the US Fed Chief’s comments on Friday provided no hints to the central bank’s next policy move. Going forward, market participants will remain focused on tomorrow’s GDP numbers in China to reassess their appetite for risk.