United States Dollar:
GBP/USD - Dovish comments from the Band of England's MPC minutes saw sterling fall heavily against the greenback. While the minutes were expected to be dovish in nature, there was little for the more hawkish to cling onto with most members stating that there was not enough evidence to justify a rake hike. The main reasoning behind the comments coming from slow wage growth, little inflationary pressure and signs that the UK economic recovery is cooling. They also felt that raising rates would leave the UK vulnerable to shocks in the global economy. In expectation of the comments, sterling fell from an overnight level of 1.6125 to 1.6025. The afternoon saw annualised US CPI figures came in slightly better than expected, at 1.7% vs exp 1.6%, and sterling regained some ground to end the European session at 1.6075. Overnight however, a broadly stronger dollar has seen the pair fall back towards the 1.6045 level. Today, the data releases of note are Septembers UK retail sales figures, released this morning, and US jobless claims, followed by their August Housing Price Index and Octobers Markit Manufacturing PMI, this afternoon. We open today with GBP/USD at 1.6025.
Euro:
GBP/EUR initially fell leading up to and just after the release of the BoE MPC minutes, but then gained as continuing speculation that the ECB could enter the Corporate Bond buying market weakened the Euro. The ECB's governing council member, Luc Coene, was also quoted in L’Echo newspaper that corporate bond buying " is the current discussion, but there is no concrete proposal on the table". Spanish news agency Efe, as quoted by Reuters, also reported that 11 European banks could fail ECB stress tests, fuelling further speculation. As such, sterling gained from a post MPC minute low of 1.2625 to just below 1.27 before levelling off at 1.2690. This morning's manufacturing and service PMI from the eurozone has posted positive readings, helping the euro regain a little ground. This morning, YoY UK retail sales numbers for September are expected to fall from 3.9% to 2.8% while MoM figures are expected to drop to -0.1% from 0.4. We open today with GBP/EUR at 1.2665. EUR/USD - better than expected inflation numbers from the US, plus speculation of an ECB corporate bond buying programme, heaped more pressure on the euro through Wednesday. EUR/USD spent the morning hovering between 1.2690 and 1.2710, before falling as annualised US CPI numbers posted a reading of 1.7% vs exp 1.6%. MoM CPI also improved to 0.1%, up from -0.2% the previous month. The positive figures saw the dollar strengthen, with the pair finding support at 1.2645. This morning's eurozone service PMI printed 52.4 vs exp 52 and Manufacturing PMI posted a reading of 50.7 vs exp 49.9. The figures see the EUR/USD slightly higher and we open today at 1.2665. This afternoon, the attention shifts to US jobless claims and market manufacturing PMI.
Aussie and Kiwi Dollars:
Overnight CPI data from New Zealand has seen the Kiwi dumped across the board. YoY CPI for the third quarter came in at 1% vs exp 1.3%, while QoQ CPI printed 0.3% vs 0.5% exp. NZD/USD fell 0.75 cents from 0.7930, before finding support at 0.7855. The Aussie dollar also fell, but not by as much as the NZD, following comments in RBA governor Glenn Stevens’ speech, sighting concerns about the build-up of credit to housing investors. AUD/USD was holding 0.8780 before falling to just below 0.8755. China's HSBC Manufacturing PMI for October posted a slight better figure of 50.4 vs exp 50.3, and we open this morning with GBP/AUD at 1.8235 and GBP/NZD at 2.0395.
Data releases for the next 24 hours:
AUD: No Data
EUR: Eurozone Consumer Confidence (Oct)
GBP: BBA Mortgage Approvals (Sep), Retail Sales (YoY & MoM) (Sep), CBI Industrial Trend Survey - Orders (MoM)(Oct)
NZD: Trade Balance (YoY) (Sep), Exports (Sep), Imports (Sep), Trade Balance (MoM) (Sep)
USD: Chicago Fed National Activity index (Sep), Initial Jobless Claims (Oct 17), Continuing Jobless Claims (Oct 10), Housing Price Index (MoM) (Aug), Markit Manufacturing PMI (Oct), CB Leading Indicator (MoM) (Sep), EIA Natural Gas Storage change (Oct 17), Kansas Fed Manufacturing Activity (Oct)
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