Euro hit by poor data

Today's Highlights

Happy Halloween

Euro hit by poor data

US data dominates

FX Market Overview

Happy Halloween or All Hallows Eve; an event which is being more widely marked in the UK than it has in decades. It does seem off that what started as a celebration of departed loved ones has turned into a fright night when kids demand goods with menaces. Good luck with the Trick or Treaters.

In the financial markets, it is the last day of the month and that will cause some volatility but there are other reasons for traders to be active.

It has been a really bad week for the Euro. German retail sales slumped, the ECB is being battered by its critics for doing nothing to stimulate growth and this morning's Italian unemployment figure was the worst on record. We will get Eurozone inflation and unemployment data this morning and it could well rock the euro unless the inflation data is at least above 0.3% growth on the year. We will find out at 10:00 am UK time.

Sterling is still in a holding pattern against most other currencies. Against the Euro it seems to have its braces caught on the €1.26 handle and against the US Dollar, $1.60 is proving a magnet. This has been a week in which UK data has been scant so the path the Pound has taken has been dictated by external events to a large degree.

US data has also been in meagre supply but we will get wages, income and expenditure data this afternoon which may help the Federal Reserve with its interest rate plans. They finalised their bond buying program this week but have yet to determine when they will start really tightening the money supply with interest rate hikes. However, they have shown confidence in the strength of the US recovery. That is slightly ill placed confidence in many analysts' minds but the US Dollar did strengthen on that statement. This afternoon also brings both business and consumer confidence indices so the USD will have a lively afternoon.

The Canadian Dollar, which has benefitted from this week's USD strength, faces the Canadian economic growth data this afternoon. Most forecasters believe the Canadian economic will be confirmed to have stagnated and that isn't good for the loonie. However, this data is for August and things may well have moved on since then.

We heard overnight that the Bank of Japan added to its bond holdings. That has the side effect of weakening bond yields and the extra effect of weakening the Japanese Yen. I am sure that was not their intention (he wrote with an ironic smile) but we have seen the Yen drop against the Pound and the US Dollar in early trade.

Next week brings purchasing managers indices from all over the world and central bank activity from the UK, Australia and others. It also beings the employment reports from the US, Canada Australia as well. We will be busy bees won't we.

A quick reminder that US and Canadian clocks go back this weekend (enjoy the extra hour in bed or in the club dependent on your lifestyle) and I'll leave you with news that the town of Vendargues near Montpellier in the South of France has banned people from wearing clown outfits and masks. Personally I would ban them anyway because they give me the creeps but this ban is due to a number of violent assaults by clown-mask-wearing attackers. So the town's Mayor, Pierre Dudieuzere, has made it an offence to be in public in an evil clown outfit. I might go there on holiday.