The data diary for the US is light this week, in the run up to the Thanksgiving holiday, but some key announcements include Tuesday’s home construction figures and the Jobless Claims report due on Thursday. Housing starts showed a drop for September, which was hoped to be a temporary blip, so those keeping a close eye on the US markets will have been relieved to see a significant rebound this time around, with building permits up to the highest level since 2007.
The week started slowly on the data and economic front, with Veterans Day in the USA and a number of public holidays across the globe to remember those we lost in past conflicts. This didn’t stop currency or stock markets from moving, however, or indeed stop politics from influencing these market movements.
The Bank of England publishes its latest Monetary Policy Committee (MPC) Minutes on Thursday, along with a report on monetary policy, in place of the usual quarterly inflation report. Markets do not expect much change in the UK’s inflation data, but expectations are growing of a decrease in interest rates. Whether this will be at Thursday’s meeting or the next is the question. Either report from the UK’s central bank could help or hinder the Pound, however, so markets will be watching for a range of signals and economic indicators on Thursday.
Trick or treat? There should be plenty of both this week and it should be a busy one for currency markets, with no fewer than three important central bank meetings and a raft of important economic data worldwide, including Gross Domestic Product (GDP), employment figures and consumer confidence indices. On the other side, Friday brings a new month and with it a raft of Purchasing Managers Indices (PMI), always watched for economic indicators and meaningful nuggets for the markets.
This week is comparatively quiet as far as economic data is concerned, but there is still plenty of political fuel for currency volatility originating right across the globe. Highlights include Draghi’s last speech at the helm of the European Central Bank, ongoing Brexit and US-China trade talk sagas, all interspersed with some economic data releases across Europe and the Americas.
With the Brexit deadline looming ever closer, the economic data released for the UK and EU takes on even greater meaning this week, and the currency markets are responding. Any whisper of a decision or deal surrounding the Brexit negotiation process is having a profound effect on the Pound. The same is true for US data due this week, against the backdrop of US-China talks taking a negative turn once more.
Today’s news report that UK Prime Minister Boris Johnson vows that the next manifesto for the Conservative Party will feat
ure a Brexit deal promise and not a default no-deal Brexit. This did not help the Pound, however, which was hit hard yesterday on continued Brexit uncertainty as tensions heightened and UK-EU talks seemed to be faltering. Trump also waded in to the conversation, as the British Pound fell against its US currency counterpart.
Politics continues to dominate the currency markets and the big factors for the Pound right now are Boris Johnson and Brexit. The major news in this saga this afternoon centres around the new Brexit proposals from UK Prime Minister, Boris Johnson, to EU President Jean-Claude Juncker. The proposals include a suggested replacement for the Irish backstop that would keep Northern Ireland in a form of single market status, referred to as an “all-island regulatory zone”. It would mean additional customs checks on goods coming from the UK into Northern Ireland but not for those moving from Northern Ireland to the Republic of Ireland.
Politics are firmly in the spotlight ahead of economic data this week, with far more dramatic implications for markets in the days, weeks and months ahead. With politician mistrust, contempt for rules and regulations, to geopolitical tensions and economic strains worldwide, data announcements are paling into insignificance against the current chaotic political landscape.