Sterling fell a further 1 percent on Tuesday as senior officials and investors pointed to the potential for more falls in a market still trying to recover from Friday's 10 percent flash crash. The past four days were the pound's worst since the aftermath of the vote to leave the European Union in June.
Bank of England policymaker Michael Saunders warned a "bumpy" Brexit could sharply reduce British economic growth, he also sounded positive regarding how the bank would react to further declines in the pound, saying it was likely to look through any impact on inflation.
Overnight in Asian trading this morning the pound was provided a small lift as Teresa May has accepted that Parliament should be allowed to vote on her Brexit plan.
Two measures of U.S. inflation expectations fell in September, with one hitting a low water mark, according to a Federal Reserve Bank of New York survey that also found Americans predicted less earnings growth in the year ahead. The survey of consumer expectations, an increasingly influential gauge of prices for the U.S. central bank, found that median year-ahead inflation expectations tumbled to 2.5 percent last month, its lowest recorded level, from 2.8 percent in August.
Other national price measures have edged higher in recent months, though inflation remains below a Fed target. The Fed, looking to raise interest rates before year end, wants to see signs of inflation pressures before acting. The dollar was again buoyed by reports of Hillary Clinton widening her lead in opinion polls over Republican rival Donald Trump.
European stock markets were steady on Tuesday as gains in the shares of major luxury goods companies offset the impact of weaker bank stocks. There were still concerns about the generally weak economic backdrop facing Europe, with Britain's decision to quit the European Union adding another layer of uncertainty. The European Central Bank's move to cut interest rates to record lows, with rates now in negative territory, has kept stock markets afloat. However, negative interest rates also hit the profits of European banks, since they make less money from their lending activities in a negative rate environment.
14:00 - USD – FOMC Meeting Minutes