O Brexit, Brexit! Wherefore art thou Brexit?
Brexit talks pushed Sterling below the 1.3000 level against the Greenback on Friday, with Cable (GBPUSD) plunging as far as 1.2914 – its lowest level in five weeks.
The decline was fueled by comments from Foreign Minister Boris Johnson, who said that article 50 may be invoked as early as the first half of next year and that the UK may have left the EU by 2019. Number 10 commented that it is Theresa May alone who will decide the terms of the Brexit. International Trade Secretary Liam Fox’s recent comments have increased speculation that any relatively quick negotiations would more likely result in a ‘hard’ exit, leaving the UK without single market access.
The US manufacturing PMI index fell to 51.4 for September, down from the previous 52.0. The September figure was the lowest reading for three months and triggered fresh doubts surrounding the manufacturing sector. Boston Fed President Rosengren raised concerns that a lack of rate hikes in the short term could shorten the economic recovery given the risks of excessive lending in commercial property. Minneapolis President Kashkari stated that he believed that there was still slack in the labour market while Philadelphia head Harker stated that the Fed could afford to be patient in raising rates.
The first US presidential election TV debate will be analysed this evening with particular focus on whether there are any major mistakes made by the candidates. Any perceived increase in support for Trump could potentially unsettle the Dollar.
The Eurozone PMI services sector as a whole weakened to a 21-month low of 52.6 from 52.9, with German data at the lowest level for 39 months. The manufacturing data was significantly more positive as it showed an increase to three-month highs.
Data to watch: 9.30am UK BBA Mortgage Approvals (Aug). 2pm US New Home Sales. 2.30pm Dallas Fed Manufacturing. 4pm Mario Draghi Speech.