Will Hillary Clinton beat Donald Trump in this week’s final US presidential debate?
There are 2 highlights this week – 1) the European Central Bank’s (ECB) monetary policy meeting and 2) the third and final US presidential debate. The ECB meeting will be an interesting one given the recent “taper talks”, while the US presidential debate will give market participants a chance to confirm if Democratic Party nominee, Hillary Clinton has the lead over Republican representative Donald Trump. Clinton is regarded as a safer bet with investors due to the similarity in her economic policies to incumbent US President, Barack Obama.
On the data front, UK’s Rightmove house prices advanced in October. In the Eurozone, the final consumer price index (CPI) for September will dominate headlines today. Across the Atlantic, US industrial production data is awaited along with a speech by the Federal Reserve (Fed) Vice Chair, Stanley Fischer.
Pound Sterling – UK Markets
Sterling is trading lower against its major peers this morning. Data released earlier during the session showed that average price of property in the British market rose for the second consecutive month in October. After a light week, the UK’s economic calendar is bustling with data releases this week and is likely to offer the Pound some solid supportive ground depending on investor moods. British inflation figures for September are due for publication tomorrow and the Bank of England (BoE) has already stated that it will overlook inflation surges caused by a drop in the Pound’s value. Unemployment and retail sales data are also up for release this week.
On Friday, the BoE’s credit conditions survey for Q3 2016 showed that secured lending for house purchases and the overall demand for corporate lending from small, medium and large businesses dropped significantly owing to the Brexit fallout. Separately, the central bank Governor, Mark Carney, came down hard on the British Prime Minister, Theresa May, and warned that he would not “take instructions” from politicians.
US Dollar – US Markets
The US Dollar strengthened against most of its major peers yesterday after the US advance retail sales rebounded in line with market expectations for September from August. This indicated that the US economy remains on track for decent growth, raising expectations for an interest rate increase in December. Meanwhile, the flash Reuters/Michigan consumer sentiment index declined for October, notching its lowest level in 13 months. In other economic news, the US budget surplus narrowed in September. Fed Chief, Janet Yellen, indicated that the US economic potential is slipping and that aggressive steps would be needed to rebuild it. She further stated that the Fed might need to run a "high-pressure economy" with a tight labour market to reverse some of the negative effects of recession.
The greenback is trading mixed against the Pound and shared currency this morning. Market participants will keep a close tab on US industrial and manufacturing production data, scheduled to be released later in the day.
Euro – European Markets
The shared currency is trading higher against the greenback and the Pound this morning. Data released earlier in the session showed that Italy’s trade surplus narrowed in August. The Eurozone’s final CPI reading for September is on its way, expected to register an increase compared to the preliminary figure. However, the annual core price figures are likely to remain steady during the month. Apart from this, the ECB President, Mario Draghi, and the Deutsche Bundesbank President, Dr. Jens Weidmann, are scheduled to deliver speeches today. The highlight this week is the ECB’s monetary policy meeting. At its previous meeting last month, the central bank left the policy unchanged. This month the ECB chief is likely to touch on the “taper talk” that has been doing the rounds lately.
On Friday, the Euro region’s seasonally adjusted trade surplus advanced ahead of expectations for August, a fresh sign that Britain’s decision to leave the European Union has had little immediate impact on growth across the continent.
Other Currencies – Highlights
The Japanese Yen is trading stronger against the US Dollar this morning, hovering above the crucial 104.0 handle. A report by Japan’s Ministry of Economy, Trade and Industry showed that a final estimate of the nation’s industrial production registered a rise for August compared to the July figure. On an annual basis, industrial output notched its highest growth since 2014. This solid uptick in August helps raise the outlook on Japan’s third quarter GDP.
Bank of Japan (BoJ) Governor, Haruhiko Kuroda, at a quarterly meeting of the central bank’s local branch managers, expressed a softer tone on further easing measures. He stated that Japan’s economy is on a moderate expansion trend and that the central bank will make necessary monetary policy adjustments to maintain the momentum toward its price-stability target, based on economic and price conditions. The bank targets 2.0% inflation rate and has struggled for nearly 2 decades to promote stable inflation and growth in the nation’s economy.