An initial advance for London was founded on energy companies and airlines, with the former rallying after good news from Tullow and Petrofac, while a drop back in oil prices aided the airline sector. However German IFO figures were below expectations, sending European bourses back downwards once again. The big event of the morning for the UK will be Mark Carney’s speech to MPs. He can expect a fairly rigorous grilling by concerned parliamentarians on the subject of his apparent shift towards a more hawkish posture, but his real challenge will be similar to that faced by Janet Yellen in her congressional testimony – i.e. giving answers that are outwardly satisfying while simultaneously avoiding over-committing himself in any one policy direction. This in itself will provide more than enough entertainment for sterling watchers, even as the pound continues its long march higher.
The US housing market comes into focus this afternoon, following on from yesterday’s existing home sales. It was a firmly indecisive session for Wall Street, with markets continuing their modest pullback from last week’s gains. Stocks could really do with a firm bounce in economic data that can underpin fresh gains and help to block out some of the news from Iraq that is beginning to sap confidence. Ahead of the open, we expect the Dow Jones to start 30 points lower at 16,907.
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EUR/USD consolidates weekly gains above 1.1150
EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains
GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains.
Gold extends rally to new record-high above $2,610
Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.
Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap
SNB is expected to ease for third time; might cut by 50bps. RBA to hold rates but could turn less hawkish as CPI falls. After inaugural Fed cut, attention turns to PCE inflation.
Bank of Japan set to keep rates on hold after July’s hike shocked markets
The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session.
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