Dollar on front foot
The dollar has been on the front foot so far this week, having lost ground immediately following last week’s Fed meeting (at which US interest rates were cut for a third time this year), and is currently trading at just over $1.1050 against the euro, which is well within the range of $1.09 to $1.12 that has prevailed since the beginning of August. As the general election in the UK formally gets up and running, the pound has also lost some ground to the dollar, trading at about $1.12850 this morning, but is holding its own against the single currency, hovering around the 86p level
After almost two years of trade policy-related uncertainty, which has weighed on global growth, there’s a chance that 2019 will end with a US-China trade agreement, or at least with the first ‘phase’ of a deal, which according to Chinese sources would see the tariffs that have been imposed over the past 18 months or so ‘rolled back’ over time
Industrial production in Germany fell for a 4th month in six in the month of September, though the pace of decline in output in Q3 as a whole, while still significant, did slow from that registered in the second quarter
The Bank of England announces its latest monetary policy decision at noon today, but with the general election campaign underway, this will be an excuse for the BOE to stay on the sidelines. In September, the BOE set out three Brexit-related scenarios with differing implications for interest rates. A smooth exit (leaving with a deal and a transition) might require a ‘gradual but limited’ increase in rates over time. A further period of ‘entrenched uncertainty’ would weigh on growth and inflation, thus possibly requiring a cut in rates. In a ‘no deal’ scenario the outlook for rates would be ambiguous according to the BOE – the resulting higher inflation might require an increase in rates but the (likely) much weaker economy might require a cut in rates. We’ll see if the BOE sticks to this overall script today
Data due today include jobless claims and consumer credit in the US, while the European Commission publishes its latest forecasts