With a quiet day ahead in terms of macroeconomic releases today, currency markets are unlikely to witness any major volatility. Market participants keenly await UK September consumer prices data tomorrow which is likely to show that inflation eased for the third consecutive month. This is expected to dampen market speculation of an early interest rate rise in the UK, especially amid mixed domestic economic data and weak global conditions. In Europe, weak German wholesale prices data released earlier today has strengthened prospects of deflation engulfing the Euro zone going forward. Across the Atlantic, markets will keep a tab on comments from a US Fed official, Charles Evans, scheduled later today for further direction.

Pound Sterling – UK Markets

With a light economic calendar today, Sterling reversed some of its early session gains against the greenback and is trading below the 1.61 mark this morning. With crucial UK economic data scheduled tomorrow, the Pound is likely to witness some volatility against the majors. The annual consumer price inflation data in the UK is expected to show that inflation eased for the third consecutive month for September. With Britain’s inflation losing momentum during the latter half of 2014, prospects are strengthening that the BoE might have to keep its key interest rate low for a prolonged period. The Pound lost ground against the greenback in Friday’s trading session. A report released on Friday showed that trade deficit in the UK narrowed more than expected for August. However, the narrower deficit was due to a drop in imports and not from a rise in exports. Additionally, the UK Chancellor, George Osborne, indicated that weakness in the common currency bloc might hamper economic growth in the UK, thereby keeping the Pound under pressure against the majors.

US Dollar – US Markets

The US Dollar has slipped against its major peers in today’s trading session as comments from various US Fed officials fuelled concerns about a benign inflation environment in the US and failed to provide hints about the timing of an interest rate rise in the world’s largest economy. For the week ahead, retail sales data and Reuters/Michigan consumer confidence survey will provide further insights into the state of consumer-led growth in the US. Additionally, a speech from the US Fed Chair, Janet Yellen, will gain considerable market attention, especially amid signs of a benign price environment in the economy. With the Fed Chief leaving the door ajar for an earlier rise in interest rates, it remains to be seen if she reaffirms her stance following the latest change witnessed in the overall economic fundamentals. In the absence of crucial macro triggers in the US, the greenback gained ground against its major peers in Friday’s trading session.

Euro – European Markets

Data out earlier today showed that wholesale prices in Germany declined more than expected for September. With deflationary prospects threatening the common currency bloc, today’s report has added to concerns that Europe’s largest economy is weakening. In Friday’s trading session, the common currency lost ground against its major peers amid persistent concerns surrounding the growth prospects in the Euro zone. Few ECB policymakers reiterated that the central bank stands ready to add further monetary stimulus, if required. Over the weekend, the ECB President voiced optimism by stating that the drag of fiscal consolidation will ease in the coming months. However, the future course of the monetary policy in the Euro zone remains uncertain, given the difference in opinion between the German and other European policymakers in the rate-setting body. Market participants are likely to keep a track on this week’s crucial inflation data in the Euro zone and another speech from the ECB Chief for further direction to risk appetite.

Other Currencies – Highlights

The Canadian labour market report released on Friday showed that the nation’s unemployment rate for September dropped to its lowest level since December 2008. The report also revealed that the number of new jobs in Canada for September was the highest in seventeen months, as both full time and part time employment increased unexpectedly. Additionally, the Bank of Canada’s business outlook survey for the third quarter revealed that more firms were optimistic about sales to improve in the next twelve months. However, the Canadian Dollar showed little reaction to Friday’s upbeat data and traded in a tight range against the greenback. With little on the domestic macroeconomic front today, the Canadian Dollar is expected to remain range bound against the greenback. Meanwhile, markets will keep a tab on this week’s Canadian consumer price inflation data and US retail sales and Reuters/Michigan consumer confidence survey for further direction to the Canadian Dollar-US Dollar pair.