Sterling Recovers Losses Against Majors
The week has commenced on a relatively quiet note on the economic data front and the catalyst for trading in the Pound against its key peers today would likely depend on global macroeconomic indicators or market moving news. In the upcoming days, market participants await the release of two important data prints in the UK economy – public sector net borrowing data and retail sales report.
Across the Atlantic, the NAHB homebuilders' sentiment index is the only economic report scheduled for release later in the day. In Europe, markets are gearing up for the European Central Bank’s monetary policy announcement on Thursday.
Pound Sterling – UK Markets
The Pound has currently reversed its early morning losses against the US Dollar and the common currency, amid an absence of notable macroeconomic indicators in either of the major economies that could trigger volatility in the currency pair. Earlier in the day, a survey published by the Rightmove on house prices in Britain hit the wires, with data showing that asking prices for homes across the UK housing market in the month to mid-October rose at a slower pace than in September. But asking prices for first time buyer properties jumped this month, due to a combination of factors including lower borrowing costs, high demand and shortage of properties in the UK. The data, however, had little impact on trading in Sterling against its key peers.
In the upcoming days, there will be very few key UK economic data that could determine trading in the home currency against the majors. Amongst these, official figures revealing the amount of net debt held by the UK government and retail sales data will attract significant market attention.
US Dollar – US Markets
In a light day for economic releases, investor sentiment towards the greenback against its major peers looks subdued. Apart from this morning’s Chinese data releases, housing data in the US scheduled later today might attract some market attention. After a run of soft macro data for the US last week, markets will eye housing market data such as the NAHB housing market index due later in the day, which will be followed during the week by data that includes building permits and housing starts, mortgages, and home prices and sales which are expected to offer cues on the state of the housing market. Markets anticipate that today’s NAHB update will support the picture of a housing market that continues to benefit from a favourable mix of low borrowing costs and positive real income growth.
Last week, in positive news, Michigan University’s preliminary consumer sentiment index surpassed expectations for October, suggesting consumers brushed off fears related to financial market volatility and economic troubles abroad and focused more on continued job growth.
Euro – European Markets
The shared currency edged higher against the US Dollar this morning. The Euro area economic calendar looks empty today, with only the report by the Bundesbank on the German economy due in a short while, which could attract some market interest. In the US, the housing market index tracked by the NAHB will be eyed by currency traders. Beside these economic reports, the currency pair will be mostly influenced by the broader market sentiment today.
Again for the week, the European economic calendar is relatively quiet except on the final trading session of this week when investors will eye a string of flash manufacturing and services PMI readings from the Euro zone and its two largest economies for October. Prior to that, the spotlight will be on European Central Bank’s interest rate decision which is scheduled on Thursday. Speculation is rife that an announcement of fresh stimulus measures will be made this week, in the wake of poor data especially from major Euro zone economies such as Germany.
Other Currencies – Highlights
The Canadian Dollar is trading in a close range against the greenback this morning, amid an absence of significant economic releases in both the economies. As a result, trading in the US Dollar – Canadian Dollar currency pair will likely be influenced by global macroeconomic news. In other news, Canada goes to the polls today and last week’s opinion surveys showed that the Liberal Party is way ahead of the Conservatives. However, national elections are unlikely to trigger any movement in the Canadian Dollar against its key peers.
Moving ahead, market attention will shift towards Bank of Canada’s interest rate decision meeting and its quarterly monetary policy report which are scheduled mid-week. Expectations are for the Canadian central bank to keep its monetary policy intact at this week’s meeting. However, markets will closely scrutinize the monetary policy report for any change in the economic outlook as the nation is still struggling with the effects of low oil prices, compounded by weak global demand and a potential loss of momentum in the US.