The Battleground is set – Let the duel begin!
This is it for Donald Trump. The final opportunity for the Republican to resurrect his floundering campaign. With less than 3 weeks until election day, Hillary Clinton and Donald Trump will have their 3rd and final presidential debate this evening at the University of Nevada, Las Vegas. The Democratic representative has managed to hold the upper hand during the previous polls. However, both the prior debates were predominantly mud-slinging affairs that focused more on personality than policy.
With respect to the global economic calendar, data showed that the claimant count for September rose less than anticipated in Britain. In the US, the Federal Reserve’s (Fed) Beige Book report and the nation’s residential sector data will be eyed later today.
Pound Sterling – UK Markets
The Pound has continued its strong gains from the previous session against the US Dollar, after the just out data showed that UK’s jobless claims rose less than expected for September. Meanwhile, the ILO unemployment rate held steady at 4.9% during the 3 months ended August. Further, Britain’s average weekly earnings advanced as estimated during the period.
Yesterday, Sterling received a boost against its major peers. British annual inflation accelerated to over a 2-year high level in September. The pickup in inflation was driven by a seasonal rise in clothing prices, as well as an increase in hotel stay and fuel prices. The latest figures confirmed that a weak Pound since the Brexit vote is providing an upward push in prices. Going forward, a cheaper Sterling, along with a global recovery in commodity prices, is likely to add to inflationary pressures in Britain. This would derail the Bank of England’s (BoE) unorthodox plan to introduce another rate cut.
US Dollar – US Markets
The US Dollar weakened against most of its major peers yesterday. Data released in the US revealed that consumer price inflation rose as anticipated in September from August, notching its largest gain in 5 months on the back of rising costs of gasoline and rents. In other economic news, the nation’s NAHB housing market index slid in October, in line with market expectations, after surging to its highest level in a decade in September. However, builders continue to see the same fundamental drivers of demand, such as a strong labour market and low mortgage rates.
The greenback is struggling to recover from its losses this morning. Market participants will keenly watch US housing starts and building permits data along with the Fed’s Beige Book report, all scheduled to be released later today. And investors will keep a very close eye on the 3rd and final round of the presidential debate. Finally, there will be interest in a speech by John Williams – President of the Federal Reserve Bank of San Francisco.
Euro – European Markets
The shared currency has reversed its previous session losses and is trading higher against its major peers this morning. The Eurozone’s construction output data for August is the sole economic release in the region today. Market participants remain wary ahead of the European Central Bank’s (ECB) monetary policy meeting tomorrow. The central bank is widely expected to keep its policy unchanged, with any decisions on the future of its asset purchase programme expected to be deferred until December. However, the ECB President Mario Draghi’s accompanying statement will attract attention, with investors expecting him to counter recent talks that the central bank would consider tapering its asset purchases after the current deadline of March 2017.
There were no releases in the Eurozone macro calendar yesterday, and the Euro lost ground to the Pound after reports emerged that British inflation reached the highest level since November 2014.
Other Currencies – Highlights
The Kiwi Dollar is trading on a stronger footing against the greenback this morning, holding onto its gains for the 3rd consecutive day. Earlier in the session, data showed that New Zealand’s GDT price index rebounded during the latest Global Dairy Trade auction. Also, the most important whole milk powder prices registered its first increase in 3 Global Dairy Trade auctions.
Separately, consumer prices in New Zealand rose above expectations during the 3rd quarter of this year. However, it weakened in comparison to the previous quarter’s reading. The Reserve Bank of New Zealand (RBNZ) had held off on cutting interest rate last month, but indicated that additional easing would be needed. The overnight cash rate is currently held at record low 2.0% following a 25 basis point reduction in August. The RBNZ’s next policy meeting is scheduled for the 2nd week of November, where it is widely expected to slash interest rate - this is because inflation remains far below the target of 1-3%.