1st October 2018 Market Update
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?? GBP – On Friday morning Sterling took a slight knock as the UK’s current account deficit was worse than the markets had anticipated. However, it then benefitted against the Euro following weak core CPI from the Eurozone.
Today manufacturing PMI is released from the UK, with the reading expected to be slightly worse than last month’s reading. Reports of further Tory infighting were released over the weekend, showing the underlying political risk for Sterling.
?? EUR – CPI was then released from around Europe on Friday and this matched the market expectations. However, the core reading was weaker than expected, and this flew in the face of Mario Draghi’s statement last weekend that he forecasted inflation targets being met in the foreseeable future within the Eurozone. As a result, the Euro weakened on Friday and helped fuel the Dollar’s bull run.
Today manufacturing data has been released from across Europe and has come out slightly below expectations on the whole, however this has had little market impact.
?? USD – Despite no data of significance being released from the US on Friday, its recent bullish performance continued. Today ISM manufacturing data is being released from the US and is expected to be slightly lower than last month’s reading. However, the forecasts suggest a particularly strong figure will be released to the market. This Friday is jobs day in the US, which could cause quite a lot of volatility in the market.
On Friday the final GDP reading for the UK economy came out in line with market expectations of 0.4%. However, Sterling took a slight knock as the UK’s current account deficit came in slightly worse than expected. CPI was then released from around Europe and this also matched market expectations. However, the core reading was weaker than expectations, weakening the Euro against the Dollar in particular. This allowed the Dollar to continue its recent bullish run against the Euro. The Japanese Yen also reached its lowest levels against the US Dollar since December 2017, showing how strong the greenback is performing at the moment.
This morning reports show that a revamped NAFTA has been agreed, and the Canadian Dollar in particular strengthened reaching a 4-month high against the US Dollar. Manufacturing data is being released from across the UK, Europe and the US today and these pieces of data are likely to be the key market movers. This week key days to watch are Wednesday when services PMI is out in the UK, and Friday when it is jobs day in the US. There also remains the fundamental Brexit political risk in the market.
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