GBP

Sterling fell against all but two of
its major trading partners yesterday, notably hitting a two month low against
the euro.

Data showed that lending to businesses in September was down 3.2% from the same
month a year earlier, dampening the recent optimism surrounding the UK economy.

GBP

Sterling fell against all but two of
its major trading partners yesterday, notably hitting a two month low against
the euro.

Data showed that lending to businesses in September was down 3.2% from the same
month a year earlier, dampening the recent optimism surrounding the UK economy.

On a more positive note, mortgage
approvals were up from 66,000 to 66,735 highest levels since February 2008. This is on the back of the help to buy scheme and the
easier access of mortgages. 

However given that the UK recovery was
being driven by the housing sector, concerns are already arising about a
possible property bubble, which as we have seen before could be detrimental for
future growth.

USD

Data from
the US yesterday showed that retail sales fell to -0.1% in September versus an
expected 0.1% growth.

There was
also a consumer confidence report out that was down to 71 from 75. This is not
really surprising considering the shutdown has just ended and confidence
in the economy is weak.

The data
reiterated market thoughts that the Fed won’t taper quantitative easing anytime
soon. This resulted in the Dow Jones closing at record highs.

Euro

Data from
the euro zone this morning has shown that Spain’s economy has grown for the
first time since 2011. Third quarter growth of 0.1% was boosted by exports and
a busy tourist season as holidaymakers stayed from the trouble regions in the
Middle East and North Africa.

In
Germany the number of unemployed people has increased to 2.2mln since last
September – an increase of 28,000 people.

Today

The main focus will be on the
Federal Reserve Monetary Policy Statement this evening. Expectations are for
the Fed to maintain the current US$85bln bond buying programme as well as
having a dovish (negative) outlook considering the recent government shutdown.
However, it’s worth noting, if the Fed show no clear dovish tone with regards
to the economy then we could well see the US dollar strengthen.

Key Announcements:

10.00am – EUR – Consumer Confidence
(Oct): Expected to improve to -14.5.

10.00am – EUR – Economic Sentiment
Index (Oct): Expected to improve to 97.4.

12.15pm – USD – ADP Employment
change (Oct): An additional 150,000 jobs are expected to have been added.

12.30pm – USD – Consumer Price Index
(Sep): Expected to have fallen to 1.2%. 

13.00pm – EUR – German Consumer
Price Index (Oct): Expected to remain at 1.4%.

18.00pm – USD – Fed’s Monetary
Policy Statement and Rate Decision.

20.00pm – NZD – RBNZ Interest Rate
Decision: Expected to remain at 2.5%.