Daily Market Report 30/09/2013

The pound continued to rally higher on Friday following well documented comments made by BoE Governor Mark Carney that he see’s no further case for quantitative easing. The pound finished the day attempting to breach the most recent swing highs that we saw on the 18th September against both the euro and the US dollar

In the euro zone we had mixed data on Friday with economic sentiment at a two year high but consumer confidence dropping in September. On the political front, the crisis in Italy has made investors nervous with Italian 10 year bond yields rising to their highest in three months. Whilst in Germany, the latest polls suggest that 48% of the population are in favour of a grand coalition between Angela Merkel’s conservatives and the main centre-left SPD party.

The US dollar continued its run of losses as data on Friday failed to give any clarity over the direction of US monetary policy. Whilst personal spending and personal income rose in line with forecasts for the month of August, consumer sentiment fell more than expected in September; which is hardly surprising given the Fed’s decision this month for not tapering QE.

The threat of a government shutdown in the US also sapped support for the US dollar as a shutdown could create a drag on fourth quarter economic growth.

Looking ahead to the rest of the week, manufacturing, construction and service sector figure are all due for release from the euro zone, US and the UK. The ECB interest rate decision is due for release also and investors will be looking out for comments made in Mario Draghi’s subsequent speech on monetary policy. 

But it most likely that it will be the US in focus again with investors focusing on developments in the US budget negotiations as well as focusing on Friday’s nonfarm payroll’s report to gauge whether the economic recovery in the US is sufficiently strong enough to reduce QE.

Key Announcements:

9.30am – GBP – Mortgage Approvals (Aug): Expected to increase to 61,350.

10.00am – EUR – Consumer Price Index (Sep): Expected to fall to 1.2%.

13.30pm – CAD – GDP (Jul): Growth expected to have risen by 0.5%.

14.45pm – USD – Chicago PMI (Sep): Expected to have improved to 54.