GBP
After another volatile week, both politically and in the markets, sterling somehow managed to end proceedings in the green, despite markets not having been fully reassured by the Government’s U-turn on corporation tax, or the appointment of Jeremy Hunt as the fourth Chancellor in as many months.
The outlook for sterling, however, remains poor; gilt yields look set to rise sharply now that the BoE has halted market intervention, and as anticipation grows ahead of the next major fiscal announcement on 31st October, with volatility set to remain extremely elevated.
Looking ahead, this week’s calendar is a little quieter, with only the latest inflation and retail sales reports of note, however developments in Westminster are again likely to dominate proceedings.
EUR
The common currency chalked up back-to-back weekly losses last week, albeit in somewhat quieter trading conditions than have been seen lately, as sentiment towards the EUR continues to sour as growth risks intensify into the winter.
Furthermore, with the ECB reportedly revising lower its estimate of the terminal deposit rate, while the Fed remain as hawkish as ever, rate differentials are again starting to work out of the EUR’s favour.
This week, the latest economic sentiment figures provide the most notable data point, along with the final September inflation data.
USD
A 40-year high core inflation print spurred markets to almost fully price in two 75bps Fed hikes by year-end last week, strengthening the dollar and allowing the buck to record consecutive weekly gains against a basket of peers.
Both sides of the ‘dollar smile’ continue to work in the USD’s favour, namely sharply slowing global economic activity, and the FOMC remaining more hawkish than the vast majority of other G10 central banks.
Looking ahead, while this week’s economic calendar is a little quieter, investors will continue to pay close attention to remarks from a plethora of Fed speakers.
World News
UK Prime Minister Liz Truss is expecting to reverse more of the announced tax cuts which remain unfunded. Facing increasing pressure from her own Party, Liz Truss announced Jeremy Hunt as Chancellor to try and steady the ship, as the new Chancellor said during an interview that ‘Nothing is off the table’ and that the Government will win the confidence back from the financial markets by fully accounting the tax and spending plans.
The European Union plan to curb the price volatility on its biggest gas marketplace and prevent sharp price spikes to divert a energy crisis. The proposal includes a dynamic price limit for transactions on the Dutch Title Transfer Facility, this main index is where the benchmark for all gas traded on the continent.
Data Releases
| Date | Region | Release | Previous | Consensus |
| Tuesday 18th October | AU | Monetary Policy Meeting Minutes | ||
| Tuesday 18th October | CN | GDP q/y | 0.40% | 3.40% |
| Wednesday 19th October | UK | CPI y/y | 9.90% | 10.00% |
| Wednesday 19th October | CA | CPI m/m | -0.30% | 0.00% |
| Thursday 20th October | AU | Unemployment Rate | 3.50% | 3.50% |
| Share Index | Prev. Close | Open |
| FTSE100 | 6858.79 | 6858.79 |
| DAX | 12437.81 | 12467.54 |
| CAC40 | 5931.92 | 5949.65 |