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Possible volatility as UK/EU negotiations continue

Possible volatility as UK/EU negotiations continue

GBP

On Friday there were no UK economic data releases as political considerations dominated. The UK government announced that Prime Minister Johnson would hold talks with EU Commission President Von der Leyen on Saturday which helped support the idea of political progress being made in EU/UK trade talks.

It was also announced that further talks would be held over the next two weeks and, despite some disappointment that there were still important gaps between the two sides, there was also relief that negotiations had not collapsed. 

Sterling pushed to highs near 1.2950 against the dollar and the Euro retreated to near 1.1000.


USD

Headline US non-farm payrolls increased 661,000 for September after a revised 1.49mn the previous month and below consensus forecasts of 850,000. Manufacturing jobs increased 66,000 on the month, but there was a slowdown in the rate of recovery within the leisure and hospitality sector. 

Trump was admitted to hospital after the markets closed on Friday and there was confusion over when the first positive diagnosis had occurred and several other senior Administration figures also tested positive which reinforced underlying uncertainty over campaign developments.

There were further discussions over another US fiscal stimulus package, although with no evidence of a breakthrough. Official reports on the health of President Trump were generally positive, although there was a high degree of uncertainty, especially as one of the drugs administered is normally used only in serious cases. Latest opinion polls suggested that Democrat candidate Biden had extended his lead in national opinion polls although, again, there was still a high degree of uncertainty.

 

EUR

The headline Euro-zone CPI inflation rate declined to -0.3% for September, below expectations of -0.2%. The core rate also declined to 0.2% from 0.4% and below market expectations of 0.5%. This was the lowest core reading since the Euro was introduced and will reinforce pressure for the ECB to take additional action to underpin both reported inflation and inflation expectations. There is likely to be speculation of further monetary stimulus by the central bank.

Reservations over Euro-zone coronavirus developments continue. As of writing the Euro sits at the 1.1725 mark against the Dollar. 

 

Data To Watch

All Day – Eurogroup Meetings 

15:00 – USD – ISM Non-Manufacturing PMI

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