GBP
Having hit a record low in early trading on Monday, cable rebounded to end the week with its biggest one-week gain since March 2020, snapping a 2-week losing run, before gains stalled out just north of 1.12.
Nevertheless, the pound remains vulnerable to another violent move lower, particularly with the BoE’s gilt market intervention set to be time-limited, and with the Government showing no sign of U-turning on unfunded tax cuts.
Looking ahead, while this week’s economic docket is a little on the light side, market participants will remain attune to fiscal developments, in addition to BoE speakers, and any indication of emergency inter-meeting policy action.
EUR
The euro also managed to snap a 2-week losing run last week, benefitting from supportive end of month/quarter flows, despite worries about this winter’s energy crisis growing.
Nevertheless, the gains weren’t enough to force the common currency north of parity with the USD, leaving the bears firmly in control of proceedings as Q4 gets underway.
Looking ahead, Thursday’s ECB minutes are probably this week’s most important economic event, besides the latest round of manufacturing and services PMI surveys.
USD
The greenback briefly printed new 2-decade highs last week, before traders took profit, and end of month flows began to take over, resulting in the DXY notching its first red week in three.
Nevertheless, with the FOMC doubling-down on hawkish rhetoric, inflationary pressures remaining intense, and global growth continuing to slow, it remains tough for traders to bet against the USD.
This week, Friday’s jobs report highlights the economic calendar, with the data set to show the labour market remaining tight, supporting the case for further aggressive Fed hikes.
World News
UK Chancellor Kwasi Kwarteng has announced a U-turn on cutting the top rate of income tax. In an announcement this morning the Chancellor confirmed that the Government will not be proceeding with the abolition of the 45p tax rate, advising that he has listened to those that are against it. This comes as mounting pressure from their own Conservative party against the majority of details from the mini budget.
Brazil is set to head to the polls again for a second-round vote after both presidential candidates failed to gain enough support for an outright win. The run-off election due to take place on the 30th October will be against former president Luiz Inacio Lula da Silva and Jair Bolsonaro who both failed to get more than 50% of the vote.
Data Releases
| Date | Region | Data | Forecast | Previous |
| Monday 3rd October | US | ISM Manufacturing PMI | 52.5 | 52.8 |
| Tuesday 4th October | AU | RBA Cash Rate Decision | 2.85% | 2.35% |
| Tuesday 4th October | US | JOLTS Job Openings | 11.35m | 11.24m |
| Friday 7th October | US | Non-Farm Employment Change | 265k | 315k |
| Friday 7th October | US | Average Hourly Earnings | 0.30% | 0.30% |
| Share Index | Prev. Close | Open |
| FTSE100 | 6893.81 | 6893.81 |
| DAX | 12114.36 | 11951.84 |
| CAC40 | 5762.34 | 5697.47 |