With little on the domestic macroeconomic front today, Sterling investors will keenly eye tomorrow’s labour market report in the UK for further direction. Additionally, the BoE’s quarterly inflation report will attract considerable market attention, as inflation in the UK continues to hover well below the central bank’s target rate.

Across the Atlantic, the NFIB small business optimism survey is the only notable macro release today. After last week’s ADP report indicated that job growth among small firms remained robust, market participants are expecting today’s data to show an improvement in morale among these businesses for October. Meanwhile, GDP data from Euro zone economies due later this week will be eyed for clarity on the health of the region’s economy.

Pound Sterling – UK Markets

With a light domestic economic calendar today, the Pound is trading in a tight range against its key peers this morning. Market participants remain focused on tomorrow’s labour market report in the UK, which is expected to show a drop in the unemployment rate and an improvement in domestic wage earnings. With the latest macro data in the UK remaining mixed and amid recent concerns raised by key BoE officials about muted wage growth, tomorrow’s report is anticipated to provide some relief to investors. Additionally, the BoE is scheduled to release its quarterly inflation report for the fourth quarter. This will be keenly scrutinised by investors to ascertain if weak inflation in the Euro zone causes any further impact, particularly considering that Britain’s inflation slowed sharply during the end of the third quarter.

Sterling lost ground against the greenback yesterday amid renewed signs of geopolitical tensions in Eastern Europe. Separately, the BoE Governor, Mark Carney, indicated that the central bank will not help the nation’s banks with any further bailouts.

US Dollar – US Markets

The greenback is trading in a tight range against the majors this morning ahead of the NFIB small business optimism survey for October scheduled later today. With the US economy showing a remarkable pick-up in economic growth recently, market participants expect today’s survey to show an improvement in morale among small domestic firms. Going forward, this week’s retail sales and Reuters/Michigan consumer confidence data in the US will attract significant market attention. These reports will help traders gain a broader picture about the strength of consumer-led growth in the US during the fourth quarter, especially with the holiday period fast approaching.

In yesterday’s trading session, the US Dollar strengthened against its major peers amid fresh tensions in Eastern Europe. Additionally, the greenback remained supported following the release of soft consumer price inflation data in China, which weighed on risk appetite among investors.

Euro – European Markets

The common currency lost ground against the greenback in yesterday’s trading session after briefly moving above the 1.25 mark. The ECB Executive Board member, Yves Mersch, indicated that the central bank will be ready to buy asset-backed securities next week as part of the central bank’s stimulus plan. He further emphasised the theoretical possibility of the ECB buying sovereign bonds, if the economic scenario in the Euro bloc worsens. Additionally, renewed signs of geopolitical tensions between Russia and Ukraine increased the possibility of the Euro zone imposing further sanctions on Russia.

In the absence of major economic releases during the course of today’s trading session, the Euro is trading in a tight range against its major counterparts. Going forward, the preliminary German GDP data for the third quarter will be eyed later this week to help market participants reassess their macro outlook towards the region, given the possibility that Europe’s largest economy might have slipped into a recession as early as the third quarter of 2014.

Other Currencies – Highlights

The Aussie Dollar lost ground against the greenback and is trading close to the 0.86 mark this morning following the release of mostly downbeat domestic macro data. The NAB report released earlier today showed that confidence among domestic firms deteriorated for October amid signs of a slowdown in China’s economy. However, the report showed that the business conditions index improved for October. Separately, another survey showed that growth in house prices slowed for the third quarter.

Later today, the Australian Dollar is likely to take direction from the domestic Westpac consumer morale report and the US NFIB small business optimism survey. Moving ahead, US retail sales and Reuters/Michigan consumer sentiment data scheduled later this week will attract considerable market attention for further direction to the Australian Dollar against the US Dollar.