What you need to know before markets open:

• US Dollar is likely winner of the FX market with the US tax cut plans becoming tangible reality.  
• Tentative signs of improvement were reached over Brexit talks deadlock at the dinner of political elite at the European summit, but meetings are set to continue on Friday.
• Watch CAD moving as key retail sales and CPI data are due.

 

Friday’ s market moving events

• The UK public sector net borrowing is expected to rise to GBP 5.7 billion in September.
• Canada’s retail sales are expected to rise 0.5% m/m in August, yp from 0.4% m/m in July.
• Canada’s CPI is expected to rise 0.3% m/m in September with core CPI rising also 0.3% m/m.
• Cleveland Fed President Loretta Mester will speak on a panel at "The Future of Global Finance: Populism, Technology and Regulation" conference in New York City.
• After market hours Federal Reserve Chair Janet Yellen will deliver a lecture on "Monetary Policy Since the Financial Crisis" at the NEC Herbert Stein Memorial Lecture and Annual Members Dinner in Washington, DC.
• Spanish government will meet on Saturday possibly triggering article 155 of the spanish constitution taking the control of Catalonia striving for independence.

 

Major forex market movers

• EUR was under pressure as Catalan political risk increased, but regained ground after Spanish government announced it will apply article 155 and take control over Catalonia.
• GBP fell sharply vs US Dollar after retail sales fell more than expected on Thursday.
• GBP is likely to extend loses over the rest of the week as British PM Theresa May is unlikely to reach deal with EU about progression of Brexit talks.
• Janet Yellen’s speech is with FX market close so her remarks are likely to take effect on US Dollar on Monday.
• CAD will be affected by both retail sales and CPI reports due.

 

Thursday’s macro summary

• ECB governing council member Ewald Nowotny said for Austrian newspaper Der Standard that reaching inflation target this and next year is unlikely, but policy can be "normalised" before target is reached. He also said ECB cannot stop asset purchases abruptly, decision how to proceed must be made in October and he sees arguments for slowing purchases.
• The UK retail sales fell -0.8% m/m in September falling short of market expectations and weakest in last four years adding pressure on growth in Q3. Consumers are hammered by negative real, inflation adjusted, wage growth and companies struggle to pin their expectations as Brexit talks stall.
• Rating agency Moody’s said that weaker economic outlook, higher unemployment and inflation, and rising household debt will all put pressure on the performance of some UK consumer securitisation deals.
• US weekly jobless claims fell 22K to 222K last week, beating the market expectations.
• Philadelphia Fed manufacturing index rose to 27.9 in October, beating market consensus with sub index of employment rising sharply to 30.6 compared to 6.6 in September
• German chancellor Merkel reportedly stood behind British PM Theresa May asking both sides to soften the negotiation stance in order to break current Brexit talks deadlock at the dinner of European summit leaders.
• US Senate approved resolution opening the way to enact tax cuts plan of president Trump.