Main currency pairs little changed

It remains fairly quiet in FX markets with the main currency pairs again not much changed. The euro and sterling are trading at around $1.0960 and $1.3070 respectively against the dollar, a touch softer and unchanged respectively from this time yesterday morning, while EURGBP has retreated a little from the £0.84 level, trading at about £0.8385 this morning.

In government bond markets, yields are nudging ever so slightly lower after the sizeable jump seen over the second half of last week. Equity markets, meanwhile, had another mixed session with European stocks ending slightly lower but US indices advancing, the latter led by the Nasdaq which gained 1.5% while the S&P 500 closed within a whisker of another all-time high.

ECB member Vasle notes that “even if the ECB happens to decide to lower rates next week, that wouldn’t automatically mean another cut is coming in December.” The market begs to differ though – it full by expects the ECB to cut by 25bps next week and by 25bps again in December.

The US economy grew at a solid pace again in the third quarter, judging by the latest estimate from the Atlanta Fed. It puts the run-rate for GDP growth at 3.2%, much the same as the Q2 outturn (3%), driven once again by strength in consumer spending.

It is very quiet today in terms of economic data with little of note due for release. The Fed publishes the minutes of its recent monetary policy meeting, while a number of Fed and ECB members are scheduled to speak over the course of the day.