UK Autumn Statement due.

US retail sales increased 0.3% for October after no change the previous month and above expectations of a 1.0% increase. Underlying sales increased 1.3% on the month after a 0.1% decline previously while the control group posted a 0.7% gain.

The NAHB housing index dipped further to 33 for November from 38 previously, below expectations of 36 and the lowest reading since April 2020 and the second-lowest reading for 10 years which reinforced unease over the housing sector.

San Francisco Fed President Daly stated that there is evidence that consumers are stepping back, and the Fed wants to see a slower economy. As far as interest rates are concerned, she stated that a pause is off the table right now with the discussion on the pace of hikes. She added that a high of 4.75-5.25% is reasonable.

Fed Governor Waller stated that rates still had a long way to go but was happy to slow the pace of rate hikes.

Bank of England MPC member Dhingra stated that there is now a risk of over-tightening and that there is a risk of the bank deepening the recession if it raises interest rates further.

She added that the economy is seeing strong stagnation in the services sector and that there has been a much bigger slowdown in UK trade compared with the rest of the world and this is an effect of Brexit.

The Australian data recorded a decline in unemployment to 3.4% from 3.5% and the lowest reading since 1974 while there was a larger than expected increase in employment of over 32,000 compared with expectations of 15,000.

Chancellor Hunt will present the Autumn Statement on Thursday with expectations of fiscal tightening of around £50bn with much of the tightening likely to be aimed later in the five-year period to lessen the immediate impact.

The latest OBR forecasts for the economy and borrowing levels will be watched closely.

Reduced immediate concerns over the Ukraine situation provided initial Euro support. The currency was undermined after the European close by reports that the ECB would limit the December rate hike to 50 basis points. EUR/USD dipped to lows below 1.0350 before a recovery to trade around 1.0380. The dollar showed some resilience despite lower bond yields. USD/JPY settled around 139.40 with resistance on approach to 140.00.

The Swiss franc lost ground as Ukraine fears declined. EUR/CHF moved above 0.9800 with USD/CHF gains to 0.9445.

Sterling recovered from intra-day lows despite relatively dovish Bank of England rhetoric. There were hopes that near-term UK fiscal tightening would be limited. GBP/USD settled close to 1.1900 while EUR/GBP retreated to 0.8725 from 0.8770 highs.

Commodity currencies lost ground as global equites moved lower. AUD/USD retreated to below 0.6750 and failed to draw support from the lobs data with a further net retreat to 0.6725.

Headline Canadian inflation held at 6.9% for October and in line with expectations.  USD/CAD strengthened to 1.3340 with no support from oil prices.

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