- The US dollar starts the week on solid ground with the greenback rising against its G10 peers as markets prepare for a busy few weeks ahead. This is the final full week of campaigning ahead of the US election and markets have finally woken up to the political risks ahead of the 5 November election. The result may take a few days to filter through, but the race remains tight with just over a week until the polls close.
- US data remains a key focus for markets, and we have a busy calendar in the coming days as market look for confirmation that the US economy is strong. Consumer Confidence due on Tuesday is expected to rebound slightly in October after the largest decline since August 2021. Investors will look to Wednesday’s GDP data for clues on the strength of the US outlook, with the print expected to run at a solid pace of 3.1% in the third quarter amid solid consumer spending. However, it’s not all positive, as recent data suggests a slowdown in hiring and this is likely to be confirmed in Friday’s Non-farm Payroll release. A disappointing print is expected with consensus coming in around 120k (down from last month’s 254k) and some analysts are even suggesting a negative print. Ahead of Friday’s payrolls we look forward to JOLTs on Tuesday, ADP Private Payrolls on Wednesday and weekly jobless claims on Thursday.
- The single currency remains under pressure against the US dollar hovering around 1.08 this morning as markets await GDP and inflation data in the coming days. GDP data is expected to show the region growing by 0.2%, however Germany remains the weak link with data expected to show a mild recession over the summer. Headline inflation is likely to come in unchanged at 1.7% as ECB President Christine Lagarde recently suggested that risks to inflation are now more to the downside than to the upside.
- This week’s budget in the UK will likely be the most significant for some time as Chancellor Rachel Reeves is expected to raise taxes to pay for recent government spending. Markets estimate that she will need to find saving of around GBP 30 billion to cover the shortfall.
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