Wednesday's US interest rate decision in sight

It was another week of mixed fortunes for the pound last week as we saw UK manufacturing take a knock of 0.4% in October, well below the manufacturing highs of ’08, but we did see UK production rise for the same month by 0.1% which is a positive. There was also a report out from UK bank, Halifax, which indicated a slowdown in UK house prices. On the other hand, a NIESR report last week predicted growth for UK GDP by 0.6%. Bank rates and asset purchasing facility were also kept on hold as the MPC voted to keep things where they are – only one MPC member voted for any change so there is certainly no drive to change things (yet).

This week releases a host of data; tomorrow we’ll see inflation figures out – this is of considerable importance as it has a bearing on the UK’s interest rate considerations. We’ll see important, comprehensive employment data out on Wednesday, while on Friday there is UK retail figures which is anticipated to come in at a positive 0.6%.

In Europe, EUR made some decent gains last week. Germany’s industrial production came in at 0.2% which is the most positive result we’ve seen in the past 3 months. There was some consternation from the Germans, however, when their finance minister stated that he may turn to the courts to overturn the Eurozone’s deposit guarantee scheme which will have a negative impact on leading Eurozone countries should the struggling EZ members require bailouts again.

This coming week we’ll see Mario Draghi speak in Italy, while tomorrow there’s ZEW data from Germany regarding economic sentiment. There will also be manufacturing (ZEW) data from them and the French, too, then at the end of the week more German data by way of business climate IFO numbers.

Across the Atlantic, the dollar lost out to competitors as pundits speculated on what the Fed will have to say on a rate rise this week. Unemployment claims increased to 280,000 – more so than expected – while retail sales (monthly) came in better than thought at +0.4%. PPI (monthly) numbers were also better than expected, returning to growth at +0.3%.

This week there’ll be a glut of data – the most important of which is the US interest rate decision which pundits now have at a 80% chance of rising. This will be accompanied by FOMC data, their statement and a press conference.