Morning Report: 29 October 2015

29th October 2015 By: Ranko Berich

GBP All the action happened elsewhere yesterday as the US dollar strengthened across the board, leaving sterling to pick up the scraps of euro weakness triggered by yesterday’s FOMC statement in the United States. No headline data was released yesterday, but today’s calendar is somewhat more eventful. Mortgage lender Nationwide’s House Price Index showed a slight pick up in price growth when it was released this morning. Bank of England Money and Credit data will be released at 09:30 GMT, and will include monthly Mortgage Approvals as well as M4 money supply and Net Lending to Individuals. Later in the morning, CBI Realised Sales will be released at 11:00. Official Retail Sales released this month by the Office for National Statistics showed an impressive 1.9% jump in sales in September, so today’s Index will be a useful second look at consumer spending.

EUR The basic premise of euro weakness in 2015 now appears to be alive and well once again, after a two week period in which the European Central Bank and the United States Federal Reserve very clearly indicated that monetary policy between the two economies would probably diverge further in the near future. Yesterday and this morning’s euro data have certainly reinforced the idea that the ECB is well justified in its (probable) intention to act. German Import Prices fell 0.7% month on month, while consumer climate deteriorated. Today, the Spanish Consumer Price Index showed year on year deflation of 0.7% in October. Throughout the morning regional German CPI data will be released, culminating with the national data at 13:00 GMT.

USD Dollar strength is back with a vengeance this morning, confirmed by last night’s important Monetary Policy Statement from the Federal Reserve. The Fed’s rate setting Federal Open Markets Committee kept rates unchanged, but gave its clearest signal yet that rates would likely rise in the near future in the Statement accompanying the release. As the Financial Times pointed out this morning, all but four members of the FOMC have said in September that rates would probably rise in 2015, and last night’s statement was broadly consistent with this expectation. It’s now up to US data to confirm or challenge this assumption, beginning with today’s first reading of Gross Domestic Product growth in the third quarter. Weekly Unemployment Claims will also be released at 12:30 GMT, as will the GDP Price Index. Later in the afternoon at 13:10, the FOMC’s Dennis Lockhart will speak in Washington DC. Although Lockhart is simply delivering opening remarks at a panel discussion, he may well be tempted to comment on yesterday’s FOMC, and his speech will be closely scrutinised if this is the case due to his status as a centrist on the FOMC. Pending Home Sales will be released at 14:00.

CAD The loonie has certainly had an eventful 24 hours, at first strengthening than 1.4% from yesterday’s high vs USD in the hours preceding last night’s FOMC events in the US. Upon the release of the minutes a complete reversal in momentum occurred, driving USDCAD back up towards the highs of the days. No Canadian data was released, but US crude oil inventory data showed that inventories had fallen at the important Cushing, Oklahoma delivery point. Today at 12:30 BST Price Indices for Raw Materials and Industrial Products will be released.

UK news

Reuters. UK mortgage approvals fall for first time since May – BoE: British mortgage approvals declined in September for the first time in four months, but mortgage lending and consumer credit grew at the fastest rate in years, Bank of England data showed on Thursday.

Reuters. British house price growth picks up in October, Nationwide says: British house price growth accelerated this month, according to a survey on Thursday, another sign of renewed momentum in the housing market.