The Halifax report released earlier today has supported the notion that robust growth in Britain’s real estate sector might continue to keep its economic growth supported for the remaining quarters of 2014. However, some uncertainty persists, as the NIESR survey released yesterday revealed a marginal slowdown in growth during the third quarter of 2014. It remains to be seen whether this slowdown was due to the uncertainty surrounding the Scottish referendum or the persistent weakness in the Euro zone economy.
With a light global economic calendar today, the minutes of the US Fed’s latest policy meeting is expected to gain market attention. Although markets expect no major change in the central bank’s policy stance, a slightly hawkish tone might strengthen the US Dollar against the majors.
Pound Sterling – UK Markets
Data released earlier today revealed that growth in UK house prices was stronger than anticipated for September. In light of upbeat UK construction PMI numbers for September, markets gained some assurance that positive developments in the nation’s real estate sector might continue to support the nation’s economic growth for the remaining quarters of 2014. However, the Pound showed little reaction to today’s data and has remained range bound against its major counterparts this morning. With the BoE policy meeting scheduled tomorrow and UK trade numbers for August later this week, the Pound is anticipated to witness some volatility against its key peers.
Sterling was range bound against the majors in yesterday’s trading session. The NIESR GDP estimate showed that economic growth in the nation slowed for the third quarter, although it remained close to its pre-recession highs. Additionally, the IMF kept its 2014 economic growth forecast on the UK unchanged. However, uncertainty continued to build up on whether the nation’s economic activity is slowing down or is just a temporary phenomenon.
US Dollar – US Markets
In yesterday’s trading session, the greenback was pretty volatile against the majors. Economic data released in the US showed that consumer credit demand for August rose at its slowest pace since February 2014. However, the numbers stirred little market reaction. Separately, the New York Fed President, William Dudley, indicated that there is a reasonable chance of the US Fed raising interest rates by mid-2015, as the central bank is moving closer to its policy goals.
The minutes of the latest US Fed policy meeting is expected to generate considerable market attention later today. Through the FOMC minutes, markets will verify whether the debate among policymakers over the timing of an interest rate rise has gained any traction, as the central bank draws itself closer towards the end of its bond buying programme. With the latest jobs data showing robust growth in the US labour market, the policy hawks could gain more ammunition in the next central bank meeting.
Euro – European Markets
Data released earlier today showed that industrial output in Spain climbed at a slower than expected pace for August. The latest figures offer signs of deflationary pressures taking its toll on the Spanish economy. With the prospects of a recession threatening the German economy, markets fret the possibility of core Euro zone nations witnessing similar troubles in the future.
Meanwhile, the Euro gained some ground against the majors yesterday, despite the German industrial output data confirming that geopolitical tensions in Ukraine has left a deeper dent on Europe’s largest economy. Additionally, the IMF downgraded its global economic growth forecast for 2014 amid a stagnation in the European economy and warned that the region might be heading into another recession. With the ECB President expected to speak tomorrow, markets will keep a tab on his comments to determine the central bank’s next move. It remains to be seen if the ECB Chief reiterates his commitment to administer fresh steps to boost the region’s economy, given the persistent opposition for further loose measures from few quarters of the ECB.
Other Currencies – Highlights
The Swiss Franc retreated against the Euro and the Japanese Yen in yesterday’s trading session. Data released yesterday showed that the annual consumer price index in Switzerland slipped unexpectedly for September. A drop in prices was led by a decline in import prices and tumbling oil prices. With Europe being a major trading partner of Switzerland, concerns about a slowdown in the Euro bloc appears to be hurting the nation’s macroeconomic health, thereby strengthening prospects of a deflation in Switzerland.
Meanwhile, the Swiss Franc remained range bound against the single currency this morning. Data out today showed that the Swiss unemployment rate remained unchanged for September, in line with market expectations. With no other domestic economic releases, the Swiss Franc is anticipated to take direction from the minutes of the latest US Fed policy meeting scheduled for release later today.
Dollar Weakens as Fed Turns Dovish, Eyes on BoE
Euro Plummets as Draghi Opens Door For Rate Cuts
British Pound Stays Under Pressure Ahead of Tuesday's Vote