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October 2016

Sterling weak as BoE governor’s decision awaited

Published: Monday 31 October 2016

  • Sterling weak as BoE governor’s decision awaited
  • RBA most likely on hold but what of the statement?

Happy Halloween!
While Americans worry about Hilary’s emails, an oil pipeline slicing through Native American territory, and how much chocolate they need for all the Trick-or-Treaters, the central bankers of the world are in the spotlight this week.
We start the week with a heap of discussion over whether Bank of England (BoE) Governor, Mark Carney, will stay on beyond his chosen five-year term and might perhaps be in position for eight years; long enough to oversee the end of the Brexit negotiations (I still think “Brevival” sounds better…).  If he opts to leave after five years, Sterling will most likely fall a little due to the uncertainty, but Mark Carney hasn’t been a supporter of, nor a facilitator of, a strong Pound, and his replacement may have a different view. Sterling begins the week in a sorry state, but may get a fillip from stronger mortgage lending, a relatively solid manufacturing Purchasing Managers’ Index (PMI) and an unchanged decision from the BoE on Thursday. Also on Thursday, the service sector PMI is likely to be in line with last month’s results – so no decline – and that would be positive.
The Reserve Bank of Australia is in the news as well. They are expected to leave their base rate on hold at 1.5% early tomorrow (GMT time) and we are all interested to see what they think of the strength of the Aussie Dollar and the potential for growth in the domestic economy.
The US Federal Reserve is also likely to leave the base rate alone this month. They will announce their decision on Wednesday. Most analysts believe they will stay their hand, but the tone of their statement is likely to point to a December hike. Many a slip twixt cup and lip, though. So, while the USD would strengthen if that was the outcome, there is plenty of water to flow beneath the bridge before then; Friday’s employment report for example. Roughly 170,000 jobs are thought to have been created in October and that is quite a subdued level in comparison to the higher numbers being achieved just a few months ago. Nonetheless, there is a strong chance that the unemployment rate will dip to 4.9% and that is a positive.
We will also get the Canadian employment report on Friday. Another small decline in the numbers in work is a concern, but the general unemployment level is forecast to remain at 7.0%. The overvalued Canadian Dollar could slide a little if that is the figure.
There is plenty of other data around this week. It looks like being a lively one. Hope yours is likewise, in a positive way.
With that, I will let you get on with your day, but first, there is something very important I need to mention and it will set the tone of your day, so I will…without further ado….and with all the best intentions, say this…..……Boo!

Interesting Halloween facts


  • ‘Halloween’ is short for ‘All Hallows’ Eve’;  the evening before All Hallows Day, or Hallowmas, on 1st November. It is variously known as ‘Witches Night’, ‘Lambswool’, ‘Snap-Apple Night’, ‘Samhain’, and ‘Summer’s End’.
  • The original tradition of carving faces into vegetables started with turnips and not pumpkins.
  • Trick or treating probably stems from the ‘punkie’ tradition that started in the villages of Hinton St George and Lopen in Somerset, where children took carved jack-o-lanterns (known as ‘Punkies’) from house to house, asking for gifts on the threat of tricks being played on the householders.
  • In Germany, it is traditional to hide all the knives in the house on Halloween so that returning spirits can’t harm you.
  • In the film, Halloween (1978), the budget was so tight that they had to use the only mask available for the villain, Michael Meyers; a William Shatner mask from Star Trek merchandise.
  • ‘Samhainophobia’ is the fear of Halloween.
  •  Mexico celebrates the Days of the Dead (Días de los Muertos) on the Christian holidays All Saints’ Day (1st November) and All Souls’ Day (2nd November) instead of Halloween. The townspeople dress up like ghouls and parade down the street.
  • Dressing up on Halloween stems from a Celtic tradition of disguising themselves to hide from the spirits who were said to roam the earth on that night. 

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 10:30 UK: Net Lending to Individuals month-on-month 4.5b 4.6b
GBP 10:30 UK: Mortgage Approvals 60k 62k
EUR 11:00 EU: Consumer Price Index (CPI) Flash Estimate 0.4% 0.5%
EUR 11:00 EU: Core Consumer Price Index (CPI) Flash Estimate 0.8% 0.8%
EUR 11:00 EU: Flash Gross Domestic Product (GDP) 0.3% 0.3%
CAD 13:30 Canada: Raw Materials Price Index (RMPI) -0.7% 0.5%
USD 13:30 US: Core Personal Consumption Expenditures (PCE) Price Index 0.2% 0.1%
USD 13:30 US: Personal Spending month-on-month 0.0% 0.5%

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Daily Currency Analysis by David Johnson

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