Japanese industrial production dropped in September

A 5.4% contraction in Japan’s industrial production in the month of September caused the GBPJPY rate to push back above JPY 156. Overnight. It’s not a huge move but it does show there are sufficient sterling buyers at 155.50 to keep this exchange rate elevated.

The overnight news from Australia was fairly upbeat. Retail sales rose 1.3% in the month of September ‘coma’ which was well above the market expectation of 0.2% add a healthy reversal of the 1.7% contraction in August. We also saw the third quarter producer price indices. A 2.9% annual rise is perhaps not surprising, given the rise in commodity prices, which fuels this number but also helps Australia’s exporters.  This data did bring the GBPAUD exchange rate down initially But it bounced from AUD 1.8260 and is rising in early UK trade.

The eurozone is going to have a busy morning. German economic growth data for the third quarter and the same data for the whole of the eurozone will keep traders busy. It is accompanied by consumer price inflation data for the eurozone as well. Forecasts for the GDP and CPI data are very varied, so volatile morning is fairly well assured. GBPEUR is still above €1.18 and is trending higher in early UK trade. The EURUSD rate is a cent higher than yesterday at $1.1670 in this early morning session.

ECB less dovish than expected – EUR boosted

The rise in the EURUSD rate is more dollar-related because the GBPUSD rate pushed slightly above $1.38 yesterday and it’s still elevated at $1.3785 this morning. However, the typically opaque text of the European Central Bank’s statement yesterday is being seen as less dovish than expected. So perhaps the ECB will be shifting to tighter monetary policy as soon as many had believed. Hence the EUR buying, the US Dollar selling, and the rise of the Pound in cahoots with the Euro.

Dollar drops on softer than forecast GDP data

That said, US GDP growth data was softer than expected at just 2.0% in the three months to September. However, the inflation-signaling prices element of the data was a little stronger than expected at 5.75%. So the Dollar does have some support.

Canadian GDP this afternoon

We will see Canada’s economic growth data this afternoon. The expectation is that GDP will have risen to find 0 .7% in the month of August. To some degree, the Canadian dollar tracked the US dollar yesterday. The GBPCAD rate rose from a low of CAD 1.69 on Wednesday to this morning’s CAD 1.7025. It perhaps goes without saying but, better than expected GDP numbers today could see this pair back below CAD 1.70 post-haste.

By the way, this is the last working day of the month, so there will be a degree of traders and investors unwinding positions in the market, so unexpected volatility should be expected. (Oxymoron intended).

And whether you are a ‘dress up and go trick-or-treating’ kind of person or you are a ‘lock the door and turn the lights off and maybe they’ll go away’ kind of person, I hope you have a good Halloween weekend.

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