The Pound surged against the US Dollar when the Office for National Statistics (ONS) published a report which showed that the UK’s manufacturing and industrial production, in August, grew with a stronger pace than expected by City’s analysts. Unfortunately, the drop in the Pound’s value after Brexit, didn’t seem to revitalise British exports as the UK’s trade in goods deficit widened in August. Imports rose by 4.2%, while exports fell by 0.7%. In other news from the industrial sector, the lack of orders for Eurofighter jets is forcing British Aerospace (BAE) to slash 2,000 jobs in order to cut costs.

In Europe, probably one of the most important days in the modern history of Spain has risen. Later in the day, Carles Puidgemont, who is the Catalan president, is going to address the regional parliament and share his views on the Catalonian independence issue. The Spanish prime minister Mariano Rajoy has threatened that if Catalonia declares independence, he will have to take all the necessary measures to protect the unity of Spain. Puidgemont is under pressure not to proceed to a radical move as major companies have expressed their will to relocate to Madrid. Barcelona’s mayor has asked from Rajoy and Puidgemont to negotiate a solution to the problem that has shaken Spain in the last few days.

Pound Sterling – UK Markets

Today, the Pound jumped against the US Dollar with the exchange rate set at $1.31. Against the Euro, Sterling retained its value with the exchange rate set at €1.11. The ONS published data in the morning which showed that the growth pace in the overall UK industrial activity improved in August, surpassing expectations.

According to the ONS, the UK’s manufacturing production, in August, rose by 2.8%, on an annualised basis, surprising analysts who expected a rise by only 1.9%. On a monthly basis, manufacturing production increased by 0.4%, again better than anticipated. Good news also came from the UK’s industrial production which expanded by 1.6%, on a year-to-year basis, much better than the expected 0.8%. The bad news came from the UK’s goods trade deficit which increased to £14,245bn in the last summer month, instead of decrease, as City analysts were estimating. The total trade balance came in at £-5.626bn, almost double the expected £-2.800bn. The total trade balance figure is the biggest recorded in the last year.

The British Retail Consortium (BRC), assisted by KPMG, released a report which showed that retail sales in the UK rose by 1.9% in the last month. The results of the survey indicated that Britons are keen on spending more on essentials than buying the more expensive household goods and furniture. The BRC’s chief executive, Helen Dickinson, said that retailers worked hard to keep prices down, but in some cases, this couldn’t be done because of rising import prices. Retail market analysts said that shoppers had responded well to online discounts, while retailers try to improve their online web stores.

US Dollar – US Markets

The US Dollar slumped against the Euro with the exchange rate set at €0.85. The US Dollar Index (DXY), which measures the value of the Dollar against six major currencies, also fell coming in at 93.53.

US markets are returning to normal after the Columbus Day holiday, with no major data releases scheduled for today. The absence of major data has made markets shift their attention towards the developments in the Korean peninsula and the release of the Federal Open Market Committee (FOMC) minutes tomorrow. Defence Secretary James Mattis, speaking in a US Army event in Washington, said that the armed forces should be ready to act in case President Trump asks for it. During the weekend, Donald Trump warned that “only one thing will work with Pyongyang,” hinting at using military force.

Market analysts expect the release of the FOMC minutes tomorrow in order to search for clues regarding the Fed’s plans for an interest rate hike and the unwinding of its large balance sheet. The positive data coming from the US economy in the last month has increased the possibility for a December rate hike to 80%. In other news, the OPEC’s General Secretary, Mohammed Barkindo, urged the US shale oil producers to help plans to curb global supply. While OPEC countries and Russia have put a limit on production, US shale oil producers have increased theirs by 10% this year.

Euro – European Markets

The Euro rallied against the US Dollar with the exchange rate set at $1.17. The German economy continued to send positive signals with data releases which indicated that it’s flourishing. A report from Italy which showed that the industrial output rose, beyond expectations, also boosted the single market currency.

The German office for statistics published the country’s trade data for August. In the last summer month, exports rose by 3.1% on a month-to-month basis, three times more than anticipated by analysts. At the same time, imports rose by 1.2%, instead of 0.5% that market experts were expecting. The German trade balance in August increased to €21.6bn from €19.3bn recorded in July. An ING report said that the German economy is enjoying strong domestic demand and surging exports, which are reaching levels not seen before in the last seven years.

In Italy, data released by the National Institute of Statistics revealed that the industrial output in August rose by 5.7%, on a year-to-year basis, double than the 2.7% expected by markets. France was the Eurozone’s black sheep since the country’s industrial output fell by 0.3% in August, instead of rising by 0.4% as it had been anticipated. The Euro was boosted also from comments made by the European Central Bank’s (ECB) board member, Sabine Lautenschlager, who said that the factor holding inflation down seemed to be temporary and that she would like to see the bond purchase programme reduction start in the beginning of the next year.

Other Currencies – Highlights

Sterling fell against the Australian Dollar, trading at 1.69 AUD. The Aussie strengthened after a report by National Australia Bank (NAB) was positive overall, showing that business conditions in September remained solid. Business confidence rose a little above average, constrained by concerns around the prospects for Australian economy. NAB’s economists note that with the economy “looking better equipped to face challenges,” the Reserve Bank of Australia (RBA) should consider shifting away from the emergency stimulus settings by the second half of 2018.

The Pound strengthened against the New Zealand Dollar, trading at 1.86 NZD. Statistics New Zealand released data regarding the use of electronic cards in retail sales. Data showed that, in September, electronic card retail sales dropped by 0.1%, instead of rising by 0.7% as it had been anticipated. A solid rise in spending on consumables was observed, but the sectors of durable goods, clothing and hospitality suffered.

Sterling rose against the Swiss Franc, trading very close to the 1.29 CHF mark. According to the State Secretariat for Economic Affairs (SECO), the unemployment rate fell further in September, coming in at 3.1%, which is 0.1% down from August’s figure.