Value of Pound on the downward slope again
Sterling has dropped once again against its major peers as market participants continue to ponder how a departure from the European Union will affect the British economy. This sentiment is likely to continue throughout the day in the absence of any British economic data releases.
In Germany the consumer price index (CPI) confirmed its preliminary reading for September. In the US, with the Federal Open Market Committee’s (FOMC) September meeting minutes behind them, investors await weekly jobless claims and import price index data along with a speech by the Philadelphia Federal Reserve (Fed) President Patrick Harker.
Pound Sterling – UK Markets
The Pound has reversed its previous session gains and is trading lower against the US Dollar and the Euro this morning. Earlier in the session, a report by the Royal Institute of Chartered Surveyors, which serves as a leading indicator of the British housing market, showed that the level of new buyer enquiries rose for the first time in 7 months during September. No other economic releases are scheduled in the UK today. Looking ahead, the nation’s construction output data for August and the Bank of England’s (BoE) credit conditions survey report are due tomorrow.
Yesterday, Sterling rebounded against its major peers after the British Prime Minister, Theresa May, stated that she would allow the parliament to participate in Brexit discussions. In other news, citing leaked government papers, a leading British daily reported that the UK stands to lose up to £66 billion a year if it experiences a “Hard Brexit”. Separately, the BoE’s Deputy Governor, Jon Cunliffe, indicated that there was “great uncertainty” about the possible loss of banking activity in Britain following the Brexit vote.
US Dollar – US Markets
The greenback strengthened against most of its major peers yesterday. The FOMC’s September meeting minutes indicated that there was a division in opinion between its policymakers. The Fed officials who were in support of raising the interest rate worry that waiting too long could send the nation into a recession. In fact, several members judged that it would be appropriate to increase the interest rate relatively soon if economic developments unfold as expected by the Fed. Meanwhile, the New York Fed President, William Dudley, stated that US inflation expectations seem to be “well-anchored”.
The US Dollar is trading in positive territory against the Pound and the Euro this morning. Market participants will keep a close tab on US weekly jobless claims, monthly budget statement and the import and export price index when they are released later today. Tomorrow, traders will focus on US advance retail sales and a speech by Fed Chair, Janet Yellen.
Euro – European Markets
The shared currency is trading mixed against the greenback and the Pound this morning. The Euro seemed unperturbed by the release of German CPI data earlier in the session. The final reading of German consumer prices confirmed both the monthly as well as the annual provisional readings for September. Since there are no other data points due in the Eurozone today, market participants look forward to tomorrow’s release of the region’s trade balance and CPI data from Italy and Spain.
Yesterday, a Eurostat report showed that Eurozone’s industrial production rebounded more than expected in August, boosting hopes of a positive contribution to the region’s GDP growth. The rise was led by an increase in production of durable consumer goods, capital goods, energy and intermediate goods. However, non-durable consumer goods output registered a drop. The acceleration in factory output also helped put to rest concerns that the UK’s shock vote to exit the European Union would adversely affect exports from the Euro area to its second largest overseas market.
Other Currencies – Highlights
The Kiwi Dollar has resumed its downward trend against the greenback this morning. Data released earlier during the session showed that New Zealand’s consumer confidence index surged in October, notching its highest reading since mid-last year. The increase was driven by optimism over the future path of the economy as an expanding population and strong tourism, along with a buoyant property and labour market, keeps consumer sentiment upbeat.
Yesterday, the latest survey from Business NZ indicated that manufacturing in New Zealand continued to expand last month. Categorically, production, finished stocks, new orders and deliveries all firmly remained in expansion territory. On the other hand, official figures showed that the nation’s food price index recorded its steepest fall in 3 years for September. This was brought about by a sharp drop in prices of fresh vegetables and as chicken prices slumped to an 11-year low owing to oversupply in the market.