ECB’s Mario Draghi Says Monetary Policy Will Continue
In absence of any market moving economic releases, market participants will focus on speeches by various central bank officials today. The European Central Bank President (ECB), Mario Draghi, is expected to speak at the 26th European Banking Congress, in Frankfurt. On the data front, German producer prices surpassed investor expectations in October.
Across the Atlantic, following the slew of economic data releases yesterday, the US economic calendar seems relatively quiet today. Separately, the Federal Reserve (Fed) members William Dudley and Esther George are scheduled to speak later today and would be looked upon for fresh impetus.
Pound Sterling – UK Markets
The Pound is trading mixed against the US Dollar and the Euro this morning. Since there aren’t any significant economic releases in the UK today, market participants look forward to a string of economic data points due next week. This includes preliminary reading of the nation’s third quarter GDP, CBI industrial trends orders, BBA mortgage approvals and public sector net borrowing data. Economic data aside, Sterling is also expected to be swayed by the ongoing Brexit related news next week.
Yesterday, Sterling surged against the shared currency, boosted by an incredibly strong set of British retail sales data. The October figures managed to put even the most optimistic investor forecasts to shame, indicating that British consumers remain completely undaunted by Brexit. A rush to purchase winter clothes and a buoyant Halloween trade for supermarkets helped UK retail sales achieve this remarkable feat. At the annual level, sales growth shot up to the highest level in fourteen years.
US Dollar – US Markets
Yesterday, the greenback strengthened against its major peers, after the number of Americans applying for fresh unemployment benefits unexpectedly declined to a 43-year low last week. Moreover, on a monthly basis, the consumer price index in the US rose for a third straight month in October, recording its highest level in six months, mainly supported by increasing rents and gasoline costs. Additionally, housing starts (new residential construction projects like single-family houses or small condos) rebounded more than estimated in October, registering its fastest pace since August 2007. Separately, the Fed Chair, Janet Yellen, stated that the US economy is strong enough to withstand an interest rate increase soon. She further stated that holding off on a rate rise for too long could force the Fed to raise rates abruptly in the future to keep the economy from overheating.
The greenback is trading higher against the Pound and the shared currency this morning. Market participants will focus on the US CB leading indicator data along with speeches from Fed’s key policy members, due later today.
Euro – European Markets
The Euro ended lower against the US Dollar and Sterling yesterday. The ECB October policy minutes showed that policymakers agreed to decide in December, whether it will extend its €1.74 trillion asset purchases to support Eurozone’s weak economy. The ECB stood pat on interest rates in its October monetary policy meeting. Macroeconomic data indicated that Eurozone’s final consumer price index was revised higher on an annual basis in October, boosted by spending in restaurants and cafes. On a monthly basis, consumer price index advanced less than expected in October.
Earlier today, data indicated that Eurozone’s current account surplus unexpectedly narrowed in September from August. Elsewhere, in Germany, the monthly producer price inflation rebounded more than expected in October, on the back of rising energy prices. Meanwhile, the ECB President, Mario Draghi spoke widely in line with yesterday’s ECB minutes, and stated that the Eurozone economy remains heavily dependent on monetary stimulus.
Other Currencies – Highlights
The Canadian Dollar has extended its previous session losses against the greenback this morning, amid a broad strength in the US Dollar and as crude oil prices continue to remain weak. Looking ahead, Canada is scheduled to release its consumer price inflation figures for October later in the day, with the headline prices expected to tick higher at the annual level, while the monthly figure is likely to remain steady. The core consumer price index (CPI), which excludes the most volatile items, improved in September and the upswing is expected to continue in October. Next week, Canadians will come across the nation’s retail sales data for September.
In the previous session, the Canadian dollar weakened against its US counterpart, as strong US economic data and comments from the Fed Chairwoman, Janet Yellen, solidified expectations of an interest rate rise next month. Separately, a report by the Canadian Real Estate Association showed that sales of existing homes in Canada rose in October from September, increasing for the second consecutive month.