UK Trade Deficit Larger than Forecasted
The just released data showed that Britain’s construction output plunged in August, with the sector recording its largest slowdown since December 2012. Additionally, deficit in UK‘s goods trade expanded more than what markets had projected for August, given the weaker demand in the global economy.
In Europe, the French industrial sector recorded its strongest output growth in more than two years for August. However, Euro zone's third-largest economy experienced a more than predicted drop in industrial productivity for August. Across the Atlantic, investors will eye speeches by key Fed officials later today to gauge any change in their stance with regards to Fed’s rate decision.
Pound Sterling – UK Markets
The just out downbeat UK construction data has led to reversal of gains in the Pound against the US Dollar this morning. The August construction print revealed that construction firms across the UK experienced an unexpected slowdown in output growth, with the data suggesting that the weak figures might have been linked to wet weather during the month. Today’s update was in contrast to a recent survey report on construction activity which had showed robust activity growth in construction for September. In separate data, official figures revealed that the UK trade deficit expanded more than expectations in August, reflecting the weak global trade dynamics.
Sterling gave up gains against the US Dollar yesterday after the BoE voted 8-1 to leave interest rates on hold. Minutes of the BoE October meeting appeared to be slightly dovish as the central bank lowered its inflation outlook, citing downward pressure from a combination of lower oil prices and stronger domestic currency.
US Dollar – US Markets
This morning the US Dollar is trading lower against the major currencies as markets continue to ponder over the tone of the minutes of the September Fed policy meeting. The FOMC minutes, in particular, showed a greater concern about the inflation outlook and confirmed that the US economy is facing headwinds from slowing growth in China and emerging markets. But at the same time, the minutes also offered an optimistic view that the economic outlook had not deteriorated and maintained the prospects of Fed increasing its benchmark interest rate this year.
Amid a light calendar day at the end of the trading week, the spotlight will be on comments from some of key Fed officials later in the day. Atlanta Fed President, Dennis Lockhart and Chicago Fed President, Charles Evans are scheduled to deliver speeches today. Their remarks with regards to monetary policy will be eyed to gauge any change in their perspective and economic outlook. Meanwhile, US import and export price indices, due today, could have minimal impact on trading in the greenback.
Euro – European Markets
In a data thin calendar day in Europe today, only reports on industrial production in France and Italy were published earlier in the day. Productivity growth in France’s industrial sector bounced back in August, with a better than expected outcome. This follows a recent PMI survey on France’s manufacturing sector which showed that activity in the sector rose at the fastest pace in eighteen months for September, suggesting that near term outlook for the nation’s manufacturing sector looks promising. France led the Euro zone's manufacturing growth in September. Meanwhile, production in Italy’s industrial sector slumped again in August, after briefly recovering in the previous month. The Euro edged higher against the Pound this morning, post the release of the above mentioned economic data.
Minutes of the ECB’s September meeting revealed that policymakers opted to take more time to analyse downside risks to growth and inflation in the 19-nation region. The ECB was in broad agreement that weak growth in emerging markets and a renewed slump in oil prices have heightened downside risks to the region’s inflation outlook.
Other Currencies – Highlights
The Canadian Dollar is trading on a firmer footing against the greenback this morning, with the US Dollar – Canadian Dollar hovering close to multi month lows. The Loonie Dollar received a boost, as oil prices extended itsupside rally on speculation that demand is picking up. Moreover, sentiment for the US Dollar has broadly weakened after the release of the minutes of Fed’s last monetary policy meeting which has lent support to expectations of a delayed interest rate rise that could be pushed beyond the end of the year.
In the session ahead, trading in the Loonie could get influenced by Canadian employment report and Bank of Canada’s business outlook survey amid the absence of notable economic news in the US docket. Markets anticipate that upcoming employment change figures will post yet another strong reading for September, after the figures had indicated a sharp increase in hiring for August. The jobless rate is expected to tick lower for the previous month.