05/10/16 - GBP Continues Downward Movement 


In the UK, the construction sector has returned to growth. September data highlighted that there was an upturn in business activity across the UK construction sector for the first time since May, which was driven foremost by a recovery in residential building. Moreover, new orders also rebounded during September, thus ending a four-month period of sustained decline.  A prominent survey seemed to show that confidence among clients and a reduced drag on demand from Brexit-related uncertainty was the main force behind this news.




According to central-bank officials the European Central Bank (ECB) will most likely wind down their bond purchases before quantitative easing matures. It has been suggested that this could be done in increments of 10 billion Euros however this does not exclude the possibility of moving the maturity date of QE back from the end of March 2017. Since September, when officials kept their stimulus package unchanged, investors have been left guessing on when and how the program will end and over the coming months will look for hints on this. Furthermore, with Deutsche bank’s 14 billion pay out to the US Department of Justice over mortgage-back securities and concerns over its ongoing capitalisation, the too-big-to-fail conundrum seems a significant issue for Chancellor Angela Merkel. Merkel has yet to rule out state aid for the bank, something especially of concern for her given a looming election next year.



India’s central bank has, for the first time in six years, decided to reduce its interest rate, including the repo rate, in an effort to bolster its economy. The interest rate was previously at 6.50% and has now been cut by 25 basis points to 6.25%. The newly instated governor of the Reserve Bank of India, Urjit Patel, made this decision along with the newly created 6 person monetary policy committee. Urjit Patel is well-known to take a tough stance on the countries inflation which has for a while been an ongoing concern and investors will be keenly watching the committees further monetary policy statements for further comments on their ongoing attempts to remedy this.



Key Announcements

09:30 - GBP - Services PMI expected to decrease slightly to 52.1

13:15 - USD - ADP Non-Farm Employment Change expected to decrease to 166K

15:00 - USD - ISM Non-Manufacturing PMI expected to increase to 53.1

15:30 - USD - Crude Oil Inventories