Limited price action in FX markets

The price action in FX markets was limited enough yesterday. The euro traded north of $1.16 against the dollar for a time but is back at about $1.1585 this morning, marginally firmer than yesterday morning’s levels. Having slipped following weaker than expected UK labour market data, sterling remains north of £0.88 against the euro and is trading at $1.3150 versus the dollar, the latter off yesterday’s best levels of circa $1.3185. Reports swirling around the place this morning of a threat to Keir Starmer’s leadership of the Labour Party – which his team is attempting to stave off – aren’t having any obvious impact on the pound, but is something to keep an eye on perhaps.

UK government bonds outperformed yesterday following the latest labour market data – which saw the market raise the chances of an interest rate cut at next month’s Bank of England meeting to around 85% – with 2-and 10-year yields falling by 7-8bps, the latter closing at a 2025 to date low of just under 4.40%. German bond yields ended flat on the day, while the US bond market was closed for Veterans  Day.

European equity markets had another solid session, adding a further 1% after posting gains of almost 2% on Monday. US stocks had a mixed day, with the Nasdaq closing lower (albeit marginally so) but the S&P 500 (+0.3%) and Dow Jones (+1%) both ending in positive territory.

The ADP weekly jobs report in the US showed private sector employment fell by an average of just over 11,000 a week over the four weeks ending October 25th, pointing to still soft labour market conditions, while small business optimism fell for a second consecutive month in October according to the latest NFIB survey.

There’s a paucity of economic data today with little or nothing of note scheduled for release, while a number of Fed members are due to speak over the course of the day.