Markets expecting fireworks

As October draws to a close there is little to report on data wise as the markets prepare themselves for an extremely busy week ahead. Instead the markets showed interest in wider political events that have grabbed the media’s attention. The dollar has traded slightly softer over the weekend with the news of further FBI investigations into Hillary Clinton’s past, causing a closing of her lead over Donald Trump. Should Trump shock the world and be instated as President of the USA on November 8th, then the markets are very likely to react with a weaker Dollar. The Dollar was under further pressure yesterday after Chicago Purchasing Managers Index posted a weaker growth figure of just 50.6 down from 54.2 last month. Personal income also missed expectation with growth at just 0.3%.

Meanwhile closer to home the pound received a small boost in afternoon trading as news broke that Theresa May has given her full backing and support to Mark Carney as the ‘best man for the job’ as governor of the Bank of England, who crucially are set to meet again this Thursday with their latest interest rate decision. Mark Carney later announced that he will not be seeing through the full 8 year term but instead will be stepping down in 2019, a timeframe that will allow for him to oversee the Brexit period. Given how stable rates have traded of late, the week ahead is set to be an explosive one, for the better or worse. Several big announcements this week will almost certainly see more significant changes in the cost of your exchange.

Overnight the busy week began with the Bank of Japan and Reserve Bank of Australia interest rate decisions. The BoJ did not announce any changes to their policy and in their statement maintained that they are prepared to continue easing policy further should market conditions warrant it. The Japanese Yen remains on the back foot currently having appreciated so much over the summer period. The RBA also held policy with no changes however with some fears that another cut may have been announced, the Aussie has strengthened overnight by 1 cent against the pound as an upbeat growth and inflation forecast has dampened any expectation of further cuts, with the Aussie now likely to continue an upward curve against the pound over the next year.

For the pound the new month kicks off as ever with successive PMI releases over the coming days leading up to the big announcement from the BoE Thursday lunch time. 9:30am will see the first release of Manufacturing PMI, a sector that was last week confirmed as having contracted in the 3 months following the referendum. GDP growth for Canada is at 1:30pm for those with a Loonie interest, and the US takes focus after lunch with their Manufacturing PMI figures at 4pm. The USD is likely to have a volatile week with the FED decision tomorrow evening at 7pm and the all important Non-Farm payroll numbers on Friday at lunch time.

In such a busy week we could see both opportunity and great risk depending on the outcomes, so make sure that you are in close contact with your account manager if you have an imminent requirement so Currency Index can help you maximise your transfer whilst minimising your risk.