For the week ahead, traders are likely to keep a tab on this week’s Bank of England inflation report. With the latest economic data suggesting that the UK economy is facing fresh headwinds, it remains to be seen if the BoE downgrades its growth forecast. Additionally, this week’s domestic labour market report will attract considerable attention, as policymakers remain perturbed by inflation in the UK outpacing domestic wage growth.

In the Euro zone, the Sentix investor confidence index showed an unexpected improvement for the current month. Across the Atlantic, following the release of the official labour market data, the upcoming retail sales data during the latter half of the week will be closely scrutinised to gauge the strength for an encompassing view of the US economy during the initial phase of the fourth quarter.

Pound Sterling – UK Markets

Sterling remained under pressure against the common currency in Friday’s trading session following the release of a downbeat trade report in the UK. The report showed that Britain’s trade deficit widened more than expected for September due to an increase in oil imports and as demand from the nation’s main trading partners in Europe remained subdued. Separately, the BoE Governor, Mark Carney, indicated that the central bank is likely to raise the key interest rate gradually to reduce volatility that markets might face during the normalisation of the monetary policy.

With little on the domestic macroeconomic front today, the Pound is trading in a tight range against its major counterparts. Market participants will look forward to this week’s crucial employment data in the UK to gain an insight into the underlying slack in the jobs market. Additionally, the quarterly inflation report later this week is likely to attract significant attention, especially after the latest BoE policy meeting minutes indicated that muted wage growth remains a major concern among policymakers.

US Dollar – US Markets

The greenback lost ground against the majors on Friday following the release of a mixed US labour market data for October. While the US unemployment rate dropped unexpectedly to a multi-year low and labour market participation improved after two straight months of decline, however, the number of job additions in the nation were less than expected. Additionally, growth in wages remained subdued last month, strengthening fears that the slack in the labour market remains. Amid mixed employment conditions, traders remain uncertain about the timing of an interest rate rise in the US. Separately, the US Fed Chief indicated that the central bank will offer a clear signal before raising its key interest rate next year, to avoid any volatile market reaction.

With no crucial economic releases today, the US Dollar is expected to trade in a tight range today Soft consumer price inflation reading for October may curtail risk appetite and support the US Dollar. Tomorrow’s NFIB small business optimism survey for October in the US is likely to attract considerable market attention considering the current focus on cues from the labour market.

Euro – European Markets

After nudging close to the 1.25 mark against the US Dollar, the single currency found support following the release of upbeat Sentix investor confidence report. The just released Sentix report showed that confidence among investors improved unexpectedly for November. This eased concerns among investors, especially amid softness in most of the latest macro triggers in the Euro zone lately. Moving forward, traders will keenly eye the preliminary GDP numbers from Germany and the Euro zone later this week. Market consensus expects an almost flat growth for the third quarter.

In Friday’s trading session, the Euro gained ground against the greenback after the release of the mixed US labour market report and surpassed the 1.24 mark. Separately, data released in Germany revealed that industrial output rebounded and the trade surplus widened on the back of an increase in exports for September. Although both macro triggers missed market estimates, an improvement stoked hopes that economic conditions in Europe’s largest economy might be improving during the fourth quarter.

Other Currencies – Highlights

The Canadian Dollar gained ground against the greenback in Friday’s trading session following the release of the upbeat labour market survey in Canada. The survey showed that the unemployment rate in the nation dropped surprisingly to its lowest level since November 2008, amid a sharp unexpected increase in the number of employed people for October. The robust hiring pace was led by a strong number of job additions in the domestic private sector and offered evidence of a broad based recovery in the nation’s economy. Additionally, mixed US labour market data released on Friday pressurised the US Dollar.

The Canadian Dollar is expected to trade weaker against the majors in today’s trading session, after China reported a slowdown in its consumer price inflation for October. Market participants will keep a tab on today’s Canadian housing starts which is anticipated to improve for October. Moving forward, the Bank of Canada’s review report for the fourth quarter is likely to attract considerable attention for further direction to risk appetite towards the Canadian Dollar.