European QE set to stay?

The UK looks to be ending the week on a downer as we saw the release of poor retail data yesterday that showed a drop-off last month to -0.6%. With retail numbers surging in September due, in part, to the Rugby world Cup, a drop for last month is to be somewhat expected, but there was also a drop in food sales seen as well – in fact, this is the biggest drop we’ve seen for the segment since May last year. There was also a drop in yearly retail numbers seen; from 3.8% to 4.2%. Whilst this all contributed to a poor start to the day, once things settled in GDP was able to regain some lost pride. In terms of data today, there isn’t much else out aside from September’s public net borrowing.

EUR was seen to make some gains against its competitors yesterday, hitting 1.0763 against USD, but this was followed by an MPC meeting where it was mentioned that the risk had increased that the Eurozone is going to miss its inflation target. It’s now down to what Draghi will say about policy and whether or not QE will be amended – he’ll be speaking today so it may be a chance for him to drop more clues about how/when more QE is brought into effect. There won’t be much data of interest today aside from consumer confidence numbers – anticipated to come in at -7.5 by comparison to last month’s -7.7.

Despite a drop in value for USD yesterday, there was some decent data out that showed how there has been a fall in number of people filing for jobless benefits to 271,000, and Philly Fed showed in increase in the manufacturing index to 1.9 which is up from -4.5 last month. It seems now that a rate hike is being priced into the market by pundits – although there is, of course, no guarantee. There won’t be much data of importance out today – we will see Fed members Dudley and Bullard speak, however, later today.