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November 2017

Sterling still strengthening ahead of potential rate hike

Published: Wednesday 01 November 2017

  • Sterling still strengthening ahead of potential rate hike 
  • US Federal Reserve to clarify rate hike plans
By David Johnson

It is such a tragedy to hear that another lunatic has been indiscriminately killing people in New York. If the moron thought he was targeting Americans, he failed. Five of the murderer’s eight victims were friends who had travelled from Argentina. Our hearts go out to everyone affected by such insanity.
In the financial markets, Sterling continues to strengthen ahead of tomorrow’s Bank of England meeting and after the Nationwide report showed UK house prices picked up in October. An annualised 2.5% was up from September’s 2.3%. The threat of higher mortgage costs may have galvanised activity, boosting demand, but there is still a mismatch between available listings and buyers in some areas of the country. We will get manufacturing sentiment this morning in the form of the Purchasing Managers Index (PMI) and a speech from a Bank of England (BoE) member at 10am (GMT). So, the Pound has scope for more volatility ahead of the rate decision on Thursday.
There isn’t a great deal of European data today, but Senor Puigdemont, the Catalan leader, is heading back to Barcelona. The chances are he will be arrested and that may reignite the pro and anti independence movements.
US news this afternoon includes manufacturing sentiment indices from the PMI and ISM surveys. Overall, that data is forecast to be a little on the gloomy side, so the USD could have a poor afternoon. Its overnight fate rests with the US Federal Reserve. They will announce whether they are changing the US base rate at 18.00 GMT. No change is expected but their statement should point to monetary tightening in the months ahead. The pace and commitment behind that statement will be the driver of the USD, now that diplomacy seems to have broken out in the rhetoric war with North Korea. It’s interesting how the two sides in that dispute are run by men with such interesting taste in hair styles, don’t you think?
And it is sad to hear that the Nippy Bus company in Somerset has ceased to trade, but the nature of the shutdown does make you wonder what led to that moment. The MD, Sydney Hardy, sent a message out to the staff on Sunday night, suggesting they should have a lie in and confirming that the company would no longer operate because he was quitting because, ‘I cannot work with you, the people I employ, for a moment longer.’  There is a much larger story in there somewhere.
Tim Vine one liners
“I was stealing things in the supermarket today while balanced on the shoulders of vampires. I was charged with shoplifting on three counts.”

“Uncle Ben has died. No more Mr Rice Guy.”

“I saw this advert in a window that said: ‘Television for sale, £1, volume stuck on full.’ I thought, ‘I can’t turn that down.'”

“I’ve just been on a once-in-a-lifetime holiday. I’ll tell you what, never again.”

“Conjunctivitis.com – that’s a site for sore eyes.”

“Do you ever get that when you’re half way through eating a horse and you think to yourself, ‘I’m not as hungry as I thought I was?'”

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 10:30 UK: Manufacturing Purchasing Managers' Index  55.9 55.8
USD 13:15 US: ADP Non-Farm Employment Change 135k 202k
CAD 14:30 Canada: Manufacturing Purchasing Managers' Index 55.0 55.0
USD 14:45 US: Final Manufacturing Purchasing Managers' Index 54.5 54.5
USD 15:00 US: ISM Manufacturing Purchasing Managers' Index 60.8 59.5
USD 15:30 US: Crude Oil Inventories 0.9m -1.5m
USD 19:00 Federal Funds Rate 1.25% 1.25%
USD 19:00 Federal Open Market Committee Statement    
CAD 21:15 Bank of Canada Governor Poloz Speaks    

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