MPC member Saunders stated that prolonged high Brexit uncertainty could warrant looser monetary policy..
The dollar maintained a firm tone by default, although there was a retreat from 3-week highs amid concerns over restrictions on Chinese investment into the US.
EUR/USD recovered slightly from 28-month lows near 1.0900. Sterling was undermined by speculation over an interest rate cut after dovish comments from Bank of England member Saunders while political tensions remained intense.
The yen and Swiss franc maintained a firm tone while the Australian dollar was undermined by Reserve Bank rate-cut expectations.
There was further choppy trading in equities with domestic factors tending to dominate amid mixed sentiment. Oil prices were hampered by the recovery in Saudi Arabian output and underlying demand concerns.
Precious metals were undermined by a firm dollar and an unwinding of long positions with silver at 1-month lows. Cryptocurrencies remained under pressure with Bitcoin at 3-month lows.
Bank of England if global growth remains disappointing and adverse effects of high uncertainty are becoming clear in UK data. If a no-deal Brexit outcome was avoided, policy could go in either direction, although it was plausible that the next move in rates could be down rather than up. Relatively dovish rhetoric triggered Sterling selling with a GBP/USD slide to below 1.2300.
Irish Foreign Minister Coveney stated that the EU was ready to negotiate, but the UK hadn’t sent a serious proposal. Brexit Secretary Barclay stated that talks are coming to a moment of truth and there was still a long way to go, but a deal could be made with goodwill. GBP/USD remained on the defensive below 1.2300 while GBP/EUR retreated towards 1.1240.
CFTC data continued to indicate a large short Sterling position, maintaining the potential for substantial short covering if there are positive fundamental developments. The Lloyds business barometer improved only slightly for September and Sterling secured only marginal gains as tensions remained intense surrounding parliament and the Conservative Party conference.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:00 | EUR German Retail Sales (Y/Y)(AUG) | 3.30% | 5.20% |
| 07:00 | EUR German Retail Sales (M/M)(AUG) | 0.50% | -0.80% |
| 08:00 | CHF KOF Leading Indicator(SEP) | 94.5 | 97 |
| 08:55 | German Unemployment Change(M/M)(SEP) | - | 4K |
| 08:55 | German Unemployment Rate(M/M)(SEP) | 5.00% | 5.00% |
| 09:30 | GBP Total Business Investment (Q/Q) | - | -0.50% |
| 09:30 | GBP Current Account | -32.0B | -30.0B |
| 09:30 | United Kingdom GDP (Y/Y) | - | 1.20% |
| 09:30 | United Kingdom GDP (Q/Q) | 0.50% | -0.20% |
| 09:30 | GBP Mortgage Approvals(AUG) | 66.17K | 67.31K |
| 09:30 | GBP Consumer Credit(AUG) | 0.900B | 0.897B |
| 10:00 | CPI (EU Norm) Prelim MM(SEP) | - | 0.40% |
| 10:00 | CPI (EU Norm) Prelim YY(SEP) | - | 0.40% |
| 10:00 | CPI (EU Norm) Final YY*(SEP) | 0.50% | 0.50% |
| 10:00 | CPI (EU Norm) Final MM*(SEP) | - | -1.80% |
| 10:00 | Euro-Zone Unemployment Rate(AUG) | 7.50% | 7.50% |
| 13:00 | Germany CPI (M/M)(SEP) | - | -0.20% |
| 13:00 | Germany CPI (Y/Y)(SEP) | 1.50% | 1.40% |
| 13:00 | Germany Harmonised CPI (M/M)(SEP) | - | -0.10% |
| 13:00 | Germany Harmonised CPI (Y/Y)(SEP) | 1.20% | 1.00% |
| 13:30 | CAD RMPI (M/M)(AUG) | - | 1.20% |
| 14:45 | USD Chicago PMI(SEP) | 47.5 | 50.4 |
| 15:30 | USD Dallas Fed Manufacturing Business Index(SEP) | - | 2.7 |
| 22:00 | NZIER Business Confidence (Q/Q) | - | -34 |
| 23:30 | AUD AiG Performance of Manufacturing Index(SEP) | - | 53.1 |