Sterling has managed to keep above 1.20 against the Euro but unfortunately slipped below the 1.30 handle against the Dollar. Following a relatively quiet week we saw pretty sideways price action now leading into a pretty busy week going into November- which is expected to be a volatile month.
Sticking with this week, the data releases don’t really begin until Tuesday, where we have UK mortgage approvals in the morning which is expected to be lower than last month, I don’t think there is much to read into here, as rates are expected to be cut again I think many people are holding out for lower rates before applying for mortgages, aside from that I do not think it is a big piece of data this month. Later on Tuesday we have U.S trade balance which is expected lower than usual, this could potentially weaken the Dollar slightly, however we have US Consumer confidence coming out later in the afternoon which is expected positive which could counter act any effects seen after the trade balance data.
On Wednesday we begin the day with EUR consumer confidence, which is expected slightly better than last month, however still in negative territory, this will come out alongside economic and industrial sentiment but showing signs of more positivity which could boost the Euro slightly. Later in the afternoon we have US Core PCE data which is heavily watched by the Fed and will be important prior to November’s Fed meeting, alongside US GDP data which is expected to show a 0.2% rise in GDP, which is positive for the USD. The UK budget will be in the middle of the day, and though we are not expecting any movement on Sterling, we are always mindful of Liz Truss type of events when it comes to the budget, I don’t believe there is anything coming that will shock the market, however I would tread carefully if trading GDP on Wednesday as bond prices will dictate GBP’s movement following the announcement.
On Thursday, we have flash CPI out of Europe which is expected to stay in the 2.7% area, any movement from here could affect the market but expectation is generally quite stable currently, more importantly we have EUR unemployment data which is expected out at 6.4%, if we see anything lower then we could have a weaker Euro into Thursday afternoon. The most important release on Thursday is jobless claims and core PCE data, we are expecting strong jobs data prior to the election so we could have a stronger Dollar on Thursday afternoon.
As Friday is the first Friday of the month we have quite a few U.S releases, the first being Non farm Payrolls, this will also be coupled with manufacturing PMI’s which should make for a volatile afternoon, as this is the last NFP’s before the election and next Fed meeting, expect a lot of volatility, we are expecting strong jobs numbers however any change in that could affect the Dollar against the Euro and Sterling.