Sentiment across the global markets earlier today worsened after the release of disappointing consumer prices data in China. Market focus has now shifted towards just out UK employment data which showed that Britain's unemployment rate unexpectedly fell to its lowest level since mid-2008 in the three months to August but pay growth was a touch slower than forecasted.

Across the Atlantic, data is expected to show that consumers continued to show reluctance in spending at the close of the third quarter. In addition, producer prices in the US are anticipated to remain in negative territory. In Europe, industrial production figures in the Euro zone could attract market interest.

Pound Sterling – UK Markets

A drop in consumer prices and a less than expected rise in core prices for September in the UK, which follows a downward revision to second-quarter growth last month, led the Pound – US Dollar currency pair to drop below the 1.53 mark yesterday. Data showed that the slide in the previous month’s consumer price inflation matched April’s all time low after cheaper fuel and clothing pushed down average prices. However, the BoE is unlikely to get influenced by the dismal September CPI report while deciding on the timing of a rate rise, considering the signs of robust consumer demand and rising domestic wages.

Sterling has reversed most of its losses against the greenback this morning. The just out numbers from the UK labour market report are likely to have provided fresh impetus to the BoE in maintaining a moderately upbeat outlook for the nation’s economic growth in the near term. UK jobs market figures for August indicate that the unemployment rate unexpectedly fell to its lowest reading since June 2008. However, wage growth excluding bonus was slower than expected.

US Dollar – US Markets

The US Dollar is trading broadly weaker against the Euro and the Japanese Yen this morning. Investors now look forward to the upcoming US fundamentals in the session ahead for further trading cues. Today, trading in the greenback against the major currencies will be majorly influenced by key US reports such as retail sales data and producer prices numbers.

Markets expect today’s update on retail sales for September to be mixed. Sales at US retailers probably increased in September, albeit at a sluggish rate as strong auto sales more than compensated for lower gasoline prices and weaker spending in the housing-related categories. Excluding automobiles, retail sales activity is expected to decline for September, matching the drop witnessed in June of this year. On the inflation front, producer prices are anticipated to show a further decline into negative territory for September. Later in the day, markets will also get the latest picture of economic conditions across the 12 Fed regions in the central bank’s Beige Book.

Euro – European Markets

The upside momentum in the shared currency has lost vigor this morning, with the Euro – Sterling currency pair currently trading in a narrow range. At the same time, the Euro is struggling to maintain its gains against the greenback, ahead of Euro zone’s industrial production figures and US advance retail sales data today, which could impact trading in the currency pair. A slew of recent economic data releases have indicated that the Euro area economy could be moving into rougher waters, recording moderate growth in the third and the fourth quarter. Today’s update on Euro zone industrial activity is forecast to show a slowdown in production for August, which will probably reinforce the view of modest euro area recovery in the third quarter.

Data released earlier today confirmed that price pressures remained low in September as oil and tourism prices declined. In Italy, the final consumer prices declined more than expected for September. Meanwhile, a final reading of Spain’s EU harmonised prices was revised slightly higher from an initial estimate for September.

Other Currencies – Highlights

The New Zealand Dollar has recovered sharply against the US Dollar this morning, with the currency pair rallying above the 0.67 mark. The Kiwi Dollar was largely boosted by news that a credit rating agency has revised upward New Zealand’s dairy giant Fonterra’s outlook. The New Zealand Dollar also emerged as the best performer across the board, undeterred by disappointing Chinese inflation figures released earlier today. China is New Zealand’s largest trading partner and renewed concerns of slowing growth in the world’s second largest economy weighed heavily on commodity linked currencies, except the Kiwi Dollar today.

Yesterday, dovish remarks from the RBNZ Governor, Graeme Wheeler had accentuated the downside in the home currency against the greenback. In a speech, the New Zealand central bank Governor reiterated that further interest rate cuts are possible, even though recent economic prints in the nation have been encouraging. Looking forward, market participants will eye key macro releases from the US due later in the day for further direction.