5th October 2017 Market Update
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🇬🇧 GBP – Sterling halted its recent decline yesterday as a result of UK services sector data expanding at a faster rate in September. This positive result was above expectations and bucked the trend of disappointing results in other sectors this week. The gain for Sterling did not completely reverse losses from Tuesday, however and the currency has lost considerable ground in early trading today.
There is a lack of economic data from the UK today, but the Bank of England’s Andy Haldane will be speaking at 18:30 and analysts will be watching closely. He has previously signalled that he believes an interest rate hike could be appropriate soon, despite voting for rates to remain the same.
🇪🇺 EUR – The services sector also improved in September and reinforced the picture that the Eurozone economy is increasingly strong. The effect on the rate was less significant than for Sterling, however. ECB President Draghi’s speech at the opening of the visitor centre in Frankfurt did not provide any relevant commentary.
ECB members Praet and Coeure will be speaking on the subject of Central Eastern and South-Eastern European Countries at a conference today, which is not likely to provide any new market guidance. At 12:30, however, the Monetary Policy Meeting Accounts will be published that may strengthen the euro if a timeframe for the tapering of QE is discussed.
🇺🇸 USD – ADP employment change was released at above expectations yesterday, which gives an indication of how Non- Farm Payroll data will affect the market on Friday. The US dollar gained as a result through the early afternoon, boosted by positive services sector figures. Bullard and Yellen’s speeches had no effect on movement.
Today features a lack of economic data for the greenback, but analysts will be kept busy with numerous speeches throughout the afternoon. Powell, Williams, Harker and George will address various conferences, but none are expected to address interest rates and so the resulting movement could be minimal.
18:30pm – Bank of England MPC Member Andy Haldane Speech
12:30pm – Monetary Policy Meeting Accounts
Our View: The US dollar appears to be recovering from its recent wobble as it continues to gain ground against both Sterling and the euro. In the medium term, the pound may well continue to be pegged back by ongoing Brexit negotiations not reaching trade discussion stage. The US dollar will be influenced by market speculation and reaction to the next Fed Chair’s identity, due to be announced before the end of the month.
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