Daily Market Report - 19/10/2015

The Pound Sterling’s performance on Friday ensured it secured its third week of gains against the U.S Dollar, having ended the UK session flat on the day. Early in the day Sterling had climbed higher following the contrarian hawkish rhetoric release from the Bank of England’s Kristin Forbes that UK rates would rise sooner rather than later.

By mid to late afternoon on Friday, these gains were wiped out following the release of better than expected US data in the form of the Michigan Consumer Sentiment Index. The print of 92.1 beat consensus expectations and last month’s print of 89.0 and 87.2 respectively. 
Friday also saw the release of better than expected US Capacity Utilisation data, released by the Federal Reserve Board at 1415 London time. The print of 77.5% was slightly up on the consensus forecast of 77.4% and down on the previous month’s print of 77.8%. The reading indicates the percentage of the US production capacity which is actually used over the short-time period, in this instance the month of September. 
Kristen Forbes, a policymaker at the Bank of England, is seen as a likely early advocate for a BoE rate hike. She said on Friday that the UK had limited direct exposure to the problems seen so far in developing nations, even taking into account how they might hit key trading partners such as Germany.

Concerns over growth in China and other major emerging markets have seen the markets shift expectations of a first interest rate hike by both the UK and the US far into next year. 
Chinese GDP growth figures came out at 6.9% at 3am this morning, lower than last month’s reading of 7.0% but ahead of consensus expectations of 6.8%. Although better than consensus, the continued slide adds credence to fears that hurt the U.S. Dollar and Sterling further, and spurs expectations of another round of policy easing by the European Central Bank - a potential negative for the euro.

Friday morning, the market saw the release of Consumer Price Index data for the month of September for the Euro Area. The reading of 0.2% was directly in line with the previous months reading and the consensus forecast, and had little impact on the sideways trajectory of GBPEUR, which continued seven weeks of range trading. 

Key Announcements
15:00 – USD: NAHB Housing Market Index (Oct) expected to remain constant at 62