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End of an Era

End of an Era

GBP
Mortgage approvals and lending data did not cause any shocks yesterday, coming in above consensus despite consumer credit slowing due to poor performance in the automobile sector. Hammond’s budget did not have much of an effect on markets, despite stating that “the era of austerity was coming to an end”, and the DUP indicated they would support his budget.

The DUP did, however, say they would oppose the government if there was going to be a hard border which overshadowed the news of tax cuts and GDP growth forecasts. Against the Dollar, the Pound slipped to below 1.2800 and versus the Euro to 1.1250. There were concerns that a no-deal Brexit would trigger another budget and therefore a rate hike.

Very little data is out today with markets seemingly waiting for news on Brexit.

USD

Yesterday saw a modest Dollar uptick despite mixed numbers coming out yesterday. US core PCE index increased slightly which led to some late support for the Dollar but otherwise it was a very uneventful day for the currency.

The market’s eyes are focussed on the midterm elections and then the Nonfarm payrolls on Friday. Nothing too much is expected on the data front, it is just a case of whether there is any rhetoric from President Trump that takes the market by surprise.

EUR

The main news on Monday was the reports that Angela Merkel, the German Chancellor, told her party she would not seek another term as the leader of the CDU party. The party has been taking heavy losses in regional elections and, combined with these reports, the Euro fell to 1.1360 versus the Dollar.

Despite the continued political tension in Italy, Italian bonds performed well, offering some support to the currency. More reports then came out that Merkel wanted to remain as Chancellor until 2021 which further helped the currency. German bond yields early on Tuesday retreated and equities still proved to be weak.

Data today is minimal, with German unemployment, Italian GDP and EU GDP figures being the only pieces of data to keep an eye on.

Data to Watch:

08:00 CHF KOF Leading Indicator (Oct)
08:55 EUR Unemployment Rate s.a. (Oct)
08:55 EUR Unemployment Change (Oct)
09:00 EUR Italy Gross Domestic Product (QoQ) (Q3)
09:00 EUR Italy Gross Domestic Product (YoY) (Q3)
10:00 EUR Gross Domestic Product s.a. (YoY) (Q3)
10:00 EUR Gross Domestic Product s.a. (QoQ) (Q3)
10:00 EUR Business Climate (Oct)
13:00 USD S&P/Case-Shiller Home Price Indices (YoY) (Aug)
13:00 EUR Consumer Price Index (YoY) (Oct)
13:00 EUR Harmonized Index of Consumer Prices (MoM) (Oct)
13:00 EUR Harmonized Index of Consumer Prices (YoY) (Oct)
13:00 EUR Consumer Price Index (MoM) (Oct)
19:30 CAD BoC Governor Poloz Speech
21:45 NZD Building Permits s.a. (MoM) (Sep)

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