- The US dollar remains well supported with data released yesterday showing headline PPI rising by 0.2% m/m in October and core PPI rising by 0.3%. When viewed with the previous days CPI the data suggests a small increase in headline PCE inflation. The gains in the greenback were also affirmed by somewhat hawkish comments from Fed Chairman Jerome Powell, who said that the “economy is not signalling a need for Fed to hurry rate cuts.” Markets continue to price another 25bp interest rate cut at the December FOMC policy meeting, however the outlook into 2025 remains increasingly uncertain. EURUSD continues to grind lower with traders witnessing plenty of sellers who helped push EURUSD to a fresh low of 1.0497 before recovering a touch. A significant break below 1.05 may trigger a swift move lower. US Retail Sales and the Empire Manufacturing Survey are on the docket this afternoon and analysts will be analysing the retail sales report for clues on consumer behaviour in the US.
- Data released this morning showed that the UK economy cooled by more than analysts’ expectations in Q3 following a surprise contraction in September as businesses and households become increasingly nervous over the fiscal plans of the new labour government. GDP rose 0.1% compared with the previous quarter and below the 0.2% that markets were expecting. The economy shrank 0.1% in September alone, much worse than the 0.2% growth that was predicted. The pound continues to be influenced by what is happening to the greenback with GBPUSD still looking offered ahead of strong support at 1.2610. Next week’s CPI report is the next major event on the horizon where markets will look for clues on whether the BoE provides us with a pre-Christmas rate cut.
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