BoE Governor and Fed Chief’s Speech in Focus
In another light trading day in the UK, market focus will be on BoE Governor Mark Carney‘s testimony before the Treasury Select Committee today. Elsewhere, a slew of speeches by US Fed officials, including Fed Chairperson Janet Yellen’s remarks later today will make headlines. On the macroeconomic data front, housing starts and building permits data in the US will be eyed to gauge the health of the nation’s housing market.
In Europe, prices of goods leaving German factory gates declined more than expected in September, underlining falling energy prices and waning global demand that have dampened ECB’s efforts to spur inflation in the wider economy.
Pound Sterling – UK Markets
The Pound is trading higher against the US Dollar this morning. In the absence of any key economic release in the UK, a speech by the BoE Governor, Mark Carney will take centre stage today. The central bank Governor is scheduled to testify before the Treasury Select Committee in London and Sterling traders will keep a close watch on his remarks to see if he reiterates his stance that rates in Britain could rise irrespective of whether the US Fed finally makes a move to lift its benchmark interest rate. Also, the BoE Governor could intervene in the Brexit debate tomorrow to present the central bank’s view on the impact of a British exit from the European Union. His speech will be accompanied by a formal bank report on the subject. The Governor’s intervention to present the culmination of the BoE’s project on Brexit will set the scene for the referendum which, David Cameron, the British Prime Minister, had promised would take place by the end of 2017.
Going forward, investors look ahead to this week’s key UK economic reports, including UK government’s public borrowing and retail sales numbers for direction.
US Dollar – US Markets
The greenback has surrendered some of its overnight gains against the Euro today, ahead of a slew of speeches by key Fed officials that will attract a lot of market attention. Although the Fed’s interest rate decision meeting is not due until next week, market participants will look for cues from speeches by a number of US central bank officials. Amongst these, today’s speech by the Fed Chairwoman, Janet Yellen will draw notable market interest.
On the macroeconomic data front, two reports related to the US housing sector scheduled later in the day will demand close scrutiny to gauge the health of the nation’s residential market at the end of the third quarter. Lately, US homebuilders have been more optimistic about the housing market, according to a survey data released yesterday. A measure that tracked homebuilders confidence for this month, climbed to its highest level in 10 years. Investors will eye today’s update on housing starts and building permits to see whether the results add to yesterday’s upbeat mood.
Euro – European Markets
The Euro regained some of the lost ground against the US Dollar this morning, but its gains were seen to be limited ahead of ECB’s monetary policy meeting on Thursday. Speculation is high that the central bank will adopt a dovish tone with regard to the euro region’s inflation and growth forecasts.
Economic data released earlier in the day showed that German producer prices dropped more than expected for September, pulled lower by energy prices. On an annual basis, the decline in German factory gate prices was the sharpest since February of this year, indicating an absence of price pressures from the production side. Today’s update which showed a further contraction in German producer prices adds to a recent list of disappointing data, including factory orders and falling exports in Europe’s biggest economy, underscoring the fragility of economic recovery in the Euro zone. The dismal economic data print, however, had little influence on trading in the shared currency against its key peers today.
Other Currencies – Highlights
The minutes of the Reserve Bank of Australia's October monetary policy meeting indicated that overall growth in the nation’s economy improved in the third quarter as the resource rich economy was able to move away from its dependence on the mining sector. Following the release of the RBA minutes, the Aussie Dollar picked up pace against the US Dollar. The minutes reiterated that a lower Aussie Dollar has supported growth in the nation’s economy, signalling little change for the near term path for monetary policy. The RBA board members also noted that employment growth had strengthened despite GDP over the year having been at the lower end of the forecast range of its year ago projection. However, the RBA minutes highlighted risk in the nation’s commercial property and the property development sector.
With relatively quiet on economic news in Australia for the rest of the session, investors will eye speeches by a number of key Fed officials and a pair of US economic data for further direction.