Today's focus on BoE Minutes and US Inflation

United States Dollar:

GBP/USD - The dollar gained back some ground yesterday as better than expected home sales data supported the greenback. The pair started the day shrugging off the weaker than expected UK public sector net borrow figures from September, and traded a fairly tight 30 pip range between 1.6145 and 1.6175. It was at the top end of this range when US home sales numbers pulled the rug from underneath sterling's feet. M/m Existing Home Sales for September posted 5.17M vs exp 5.10M while the month change improved by 2.4% vs exp 1%. As such GBP/USD fell through the afternoon and US sessions before finding support around the 1.6110 level. We now look ahead to the key releases of today, the Bank of England Minutes, from their 9th Oct meeting and US CPI numbers. As mentioned yesterday, the BoE minutes may be discounted due to the fact the minutes are from a meeting that took place before the recent falls in UK CPI or the downgrades in eurozone growth. Later in the afternoon annualised US CPI is expected to show a slight fall from 1.7% to 1.6%. We open today with GBP/USD at 1.6070.

Euro:

GBP/EUR gained further yesterday as a report from Reuters surfaced that the ECB is considering buying corporate bonds. A spokesman for the ECB tried to quell the rumours by stating "The governing council has taken no such decision", but went onto to admit that the action has not been dismissed. While there are many problems to address before this happens the fact that it is one step away from sovereign bond buying has weakened the euro’s position. GBP/EUR therefore traded up almost a cent, from an open of 1.26 to level off around 1.2670. As with yesterday, no data is due from Europe so today the focus is on the BoE minutes while US CPI numbers could affect risk sentiment. We open today with GBP/EUR at 1.2660. EUR/USD - While the better than expect homes sales data from the US supported the dollar the damage was already done the as rumours of an ECB corporate bond buying program surfaced. EUR/USD fell by one and a quarter cents from an opening price of 1.2835 to 1.2710. With no data due from the eurozone it will be up to US CPI numbers to provide direction. Y/y US CPI is expected to contract from 1.7% to 1.6% so any higher than predicted falls could see US lose support. However, it is likely that the dovish euro sentiment will continue. We open today EUR/USD at 1.2690.

Aussie and Kiwi Dollars:

The better than expected Chinese GDP and Industrial Productions numbers helped the AUD and NZD enjoy buoyant trading through yesterday’s session, but the strong US home sales figures curtailed their gains. AUD/USD traded about 0.88 but soon fell finding support around 0.8770 following the US numbers. Similarly NZD/USD traded briefly above 0.80 before dropping to around 0.7970. Overnight y/y Australian CPI numbers came in as expected at 2.3% and with no data from New Zealand the higher yielding currencies seem high ranging ahead of today's US inflation report. We open today with GBP/AUD at 1.8305 and GBP/NZD at 2.0170.

Data releases for the next 24 hours:

AUD: RBA’s Governor Glenn Stevens Speech, National Australia Bank’s Business Confidence (QoQ) (Q3)

EUR: No Data

GBP: Bank of England MPC Minutes, BOE MPC Votes

NZD: Consumer Price Index (YoY & QoQ) (Q3)

USD: MBA Mortgage Applications (Oct 17), Consumer Price Index (YoY & MoM) (Sep)