Daily Market Report 23/10/2013

Recent bets that tapering of the US’s monthly bond buying programme is likely to be put back until March 2014 appeared to be validated yesterday following disappointing job market figures out of the US.

Although the official unemployment rate fell to 7.2% in September, non-farm payroll figures revealed that only 148,000 new jobs were added in the same month instead of an expected addition of 180,000. The data suggests that the US economy was weakening even before the government shutdown and as stated above, will delay the Fed’s decision to taper its monetary policy programme.

As a result risk based assets drew a lot of attraction, which saw the US dollar trade to a two year low against the euro. Losses against the pound remained bounded by a falling trend line that has been in place since 2009, but nonetheless the US dollar weakened against most of its counterparts following the data. On a slight bright note, construction spending rose by more than expected to 0.6%.

Data in the morning revealed that the UK borrowed less than expected in September due to an increase in tax revenues. The UK’s public sector borrowing fell to £9.368bn, more than an expected fall to £10.4bn. Despite the data gains in the pound were limited as market away the release of the latest minutes of the Bank of England latest monetary policy meeting.

The Canadian dollar came under fresh selling pressure once again as retail sales for August fell to 0.2% from 0.5% in July.

Inflation in Australia came in at 2.2% for the third quarter beating an expected 1.8%, erasing signs of any imminent rate cut in the nation.

As briefly mentioned above, this morning we will see the latest Bank of England minutes on voting on interest rates and monetary policy. Investors seem cautious about the outcome with the pound falling by an average of 0.5% in early morning trade.

More US data is due to released in the afternoon with indices data for house prices in the US as well as imports and exports. The Bank of Canada is also set to give their decision on the headline interest rate as well as providing a statement on monetary policy. And the euro zone consumer confidence figures are due for release.

Key Announcements:

9.30am – GBP – BoE Minutes.

9.30am – GBP – BBA Mortgage Applications (Sep): Expected to rise to 39,400.

13.30pm – USD – Export Price Index (Sep): Expected to show no increase.

13.30pm – USD – Import Price Index (Sep): Expected to show a 0.2% increase.

14.00pm – USD – House Price Index (Aug): Expected to have fallen to 0.8%.

15.00pm – CAD – BoC Rate Decision and Statement (Oct): Expected to remain at 1%.

15.00pm – EUR – Consumer Confidence (Oct): Expected to rise to -14.4.

15.30pm – CAD – BoC Monetary Policy Report.