Eurozone inflation and ECB keeping the euro weak

Today's Highlights

Sterling boosted by chancellor but tense ahead of GDP data

Eurozone inflation and ECB keeping the euro weak

Dip in Canadian GDP expected

FX Market Overview

George Osborne's commitment to deficit reduction may be a dangerous electioneering tactic but it was received well by the markets and Sterling managed to maintain its 'bid tone' to use the market jargon. In other words, the Pound strengthened on the news. It wasn't helped by a slight dip in UK consumer confidence. The index was unchanged in September and whilst that was down from the +1 in August, it was significantly better than the -10 seen in September 2013. Sterling remains rather positive this morning ahead of the final estimate of Q2 GDP growth. As long as the reading is 3.2% on the year, the Pound should consolidate in its current ranges. Anything higher or lower will cause a shift; so beware.

Consumer activity in France and Germany improved slightly last month. That is encouraging but the poor state of the manufacturing and industrial sectors still presents a concern for the European central bank which meets this week to determine interest rate and Quantitative easing policies. Today's Eurozone inflation data will shade their thinking but it is the lack of economic growth and the stubborn employment situation that are the most worrying aspects for the ECB. We will also get the unemployment data today but it is expected to be unchanged at a Eurozone wide 11.5%. Pretty dire.

This afternoon brings business and consumer sentiment indices from the US and a couple of speeches from Federal Reserve Chairmen. The US Dollar remains strong as investors continue to push funds into the safety of the US Treasury Market while tensions are heightened in the Middle East, Ukraine and in Hong Kong.

This afternoon also brings the Canadian economic growth data for July. A dip from 0.3% to 0.2% on the month is envisaged and the Canadian Dollar, which has been weakening, ought to continue in the same vein.

That's about it for today but remember that this is also the last working day7 of the month and the quarter. Traders are apt to close out some of their positions on the last day in order to secure their profits or consolidate their losses, so this can be a very volatile period. Great news if you are a user of automated orders.

Away from the markets, smuggling in booze and tobacco is well known but two guys from Lithuania were caught on the Swedish border with a van loaded with 25,000 nappies. They apparently sell for the equivalent of 40p each in Sweden but are much more expensive in Lithuania. In evading the export tax the couple were hoping to mop up the profits back home. I admit to struggling with polite puns on that story. I await your preferred punchlines with interest.