Weekly Round-Up & The Week Ahead

Weekly round-up and a look at the week ahead for EUR, GBP, and USD.

USD

Another strong week for the Greenback saw fresh highs against both Sterling and Euro. With the market now pricing in Donald Trump as odds-on favourite to become the next US President in just over a week coupled with geo-political tensions in the Middle East and Russia-Ukraine, investors are still favouring safe-haven currencies, it’s possible that Dollar gains are not done yet. On the data front, it remained light with the only high-impact data being PMI releases on Thursday which saw Manufacturing remaining in a contraction but, edging slightly higher from 47.3 to 47.8 and Services showing an expansion and an uptick from 55.2 to 55.3.

An increasing amount of data in the US this week with ADP Employment Change, GDP, Core PCE, Average Hourly Earnings, Nonfarm Payrolls and ISM Manufacturing PMI’s all to be released in the second half of the week. The market will be eager to see how this week’s data plays out with current forecasts being an 85% chance of another cut in November from the Fed.

GBP

Last week saw data slow for Sterling with the only high-impact data of the week coming on Thursday in the form of PMI’s which remain elevated. However, the release did show signs of a slowdown as Manufacturing fell to 50.3 versus 51.5 and Services with a slight drop to 51.8 versus 52.2. Despite the data being light, we did see some movement in the pound off the back of Governor Bailey’s speech on Wednesday in which he stated that ‘UK Inflation was fading faster than expected’.

This week, all eyes will be firmly on Wednesday’s budget, which is the first under the current Labour Government. With the catastrophe of Liz Truss and Kwasi Kwarteng’s budget 2 years ago still fresh in memory for most, the market could remain volatile to any surprise inclusions or omissions especially regarding tax. Other than this, we have no high-impact data from the UK this week with sentiment likely to be driven by the Budget and external data from its G3 counterparts.

EUR

Alike its G3 counterparts, data was at a premium in the Eurozone this week with Thursdays PMI releases being the only high-impact readings. Manufacturing surpassed the 45.1 forecast at 45.9 and Services declined 0.2 from September’s reading of 51.4 but, remains in expansion territory above the 50-mark. ECB President Christine Lagarde also spoke on Wednesday stating that recent inflation figures had been ‘relatively reassuring’ and that ‘the direction of travel is clear’ but, cautioned that the ‘pace’ of rate cuts is yet to be decided.

This week see’s high-impact data return with German GDP on Wednesday followed by Eurozone GDP QoQ and YoY as well as German CPI later in the day. On Thursday German Retail Sales is released along with Core CPI for the Eurozone. Euro has been under consistent pressure in recent weeks against both Sterling and US Dollar so, the market will be keeping a close eye on how this weeks data drives demand for the single currency.

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