Key Points
Quiet start to the week for Data, with majority due mid-end.
Stronger than expected non-farm payroll contributed to USD strength.
UK GDP set to increase following the previous month’s contraction.
Market Report
GBP
The pound snapped a 4-week losing run last week, though was only able to manage a rather feeble rebound back into the mid-$1.22s, benefitting largely from broad-based USD weakness as the buck consolidated across the G10 board.
Nevertheless, some optimism on the UK economy was delivered by the final PMI surveys, with an upgrade seen to both the ‘flash’ estimates for manufacturing and services, though both remain below 50, implying a MoM contraction across the economy.
Looking ahead, this week brings a light data calendar, featuring just August’s monthly GDP print, though a busy slate of central bank speakers does await, including remarks from BoE Governor Bailey on Friday.
EUR
In a similar manner to the GBP, the common currency managed a very modest gain last week, snapping an 11-week losing run, though the $1.06 handle remains too tough a nut to crack for the EUR thus far, with markets continuing to price ECB cuts sooner than G10 peers.
Last week was, however, relatively uneventful within the bloc, with the EUR continuing to be driven largely by external developments, particularly sentiment towards China, where the Golden Week holiday period looks to have provided a modest economic boost.
This week, the calendar is also relatively light on data releases on the continent, though ECB policy will remain in focus, with minutes of the September meeting due, in addition to a plethora of speakers throughout the week.
USD
The greenback snapped an 11-week winning streak against a basket of peers on Friday, despite significantly stronger than expected labour market data, with nonfarm payrolls having risen a whopping 336k in September, despite unemployment remaining unchanged at 3.8%.
This data, along with hotter than expected PMIs, and a blowout JOLTS job openings print, all reinforce the ‘US exceptionalism’ narrative that remains dominant across financial markets, suggesting the USD’s pullback is likely a pause before the upward trend resumes, rather than a turn in the tide.
Turning to the week ahead the US calendar is relatively busy, highlighted by Thursday’s CPI report, likely showing headline inflation dipping slightly to 3.6% YoY in September, though core prices are set to have remained just north of 4%, leaving the door ajar to a further Fed hike before year-end.
World News
Metro Bank has secured a £925m rescue package from investors over the weekend, which sees the troubled bank avoid a potential breakup or takeover. The high street bank aims to slash £30m in costs from 2025 as part of the deal, however it is not clear whether those cuts will result in job losses or branch closures among it’s 4,000 employees and 76 branches.
Oil prices jumped after a surprise weekend attack on Israel by Hamas, risking instability in the middle-east. Brent crude rose 3.1% to just over $87 a barrel. The price increase came as Israeli troops engaged in fierce fighting early Monday to regain control of country’s south.
Data Releases
| Date | Region | Release | Previous | Consensus |
| Wednesday 11th October | US | FOMC Meeting Minutes | ||
| Thursday 12th October | UK | GDP m/m | -0.50% | 0.20% |
| Thursday 12th October | US | CPI m/m | 0.60% | 0.30% |
| Friday 13th October | UK | BoE Gov Bailey Speaks | ||
| Friday 13th October | US | Prelim UoM Consumer Sentiment | 68.1 | 67.5 |
Indices
| Share Index | Prev. Close | Open |
| FTSE100 | 7,494.58 | 7,494.58 |
| DAX | 15,229.77 | 15,143.29 |
| CAC40 | 7,060.15 | 7,041.38 |