Party leaders fail to steady Pound
UK CBI industrial orders rose to -26 for November, up from October’s -37 slightly above the forecasts and showing a modest recovery in exports. The Pound failed to manage any further gains on the data and despite opinion polls showing a comfortable Conservative lead in the General Election campaign. The market did display signs of caution ahead of the TV debate between Boris Johnson and Jermy Corbyn and Sterling’s failure to challenge the 1.3000 mark on the Dollar led to a retreat to near 1.2920. The Euro strengthened marginally to 1.1665 after breaking the 1.1700 mark the day before. The televised leader’s debate failed to change consensus views and the global trade outlook hasn’t helped Pound support. Sterling had drifted lower to the 1.2900 on the Dollar this morning and there is no tier one UK data today.
US housing starts increased to an annual rate of 1.31mn for October from a revised 1.27mn and close to consensus forecasts while building permits strengthened to 1.46mn from 1.39mn previously. Although there are seasonal fluctuations, the data suggested that interest rate cuts were underpinning interest-rate sensitive areas.
New York Federal Reserve (Fed) President Williams stated that the central bank needed to ensure that it did not over-react to individual data points over the next few months. He also stated that the Fed could become more accommodative if inflation were to move in the wrong direction on a sustained basis. The rhetoric continued to have little impact with future markets ruling out a December rate cut.
The dollar was mixed against commodity currencies while against the Euro, consolidated around 1.1080 after trading in very tight ranges during the day. Markets are expecting a less dovish set of Federal Reserve minutes later today as the dollar secured limited net gains as trade doubts limited potential selling pressure.
After bottoming out and bouncing along the 1.1060, the Euro managed to regain some poise yesterday and pushed the common currency towards the highs of 1.1085. The pair have now dropped back lower to the 1.1060 figure as we start Wednesday trading session with a breakout in either direction a possibility.
In the data space and while the markets await the ECB minutes and speech by President Lagarde later this week, September’s Current Account surplus in the Eurozone shrunk slightly to €28.2 billion.
Data to watch
15:30 – USD – Crude Oil Inventories
19:00 – USD – FOMC Meeting Minutes