By Simon Eastman
Last week we saw the pound struggle, as the US government shutdown continued to halt data releases, leading traders into risk averse mode.
With nothing for the world to go on from regards the US economy, we saw risk averse trading which benefited the US dollar with gains made against both the pound, by around 2 cent over the week, and 1.5 cents against the euro.
The pound looked to be making some gains against the single currency by mid-week, as the stronger dollar caused the euro to weak (a biproduct of the dollar/euro currency seesaw) but as Thursday came and went, those gains were lost, and the pair ended up the week back where it started.
The market was generally quiet for data releases, despite the US shutdown, so there was little of note for traders to go off other than risk sentiment, but this week could shape up differently. It starts off quiet with no data releases and the US markets closed for Columbus Day.
As a late addition, markets saw the dollar weaken as President Trump announced late on Friday, he would be imposing 100 percent tariffs on Chinese imports into the US because of China deciding to impose strict licensing rules on foreign entities moving rare minerals out of China. We saw an immediate loss in the dollar’s value, with sterling making a cent against the greenback late on Friday.
In the crypto world, traders saw a whopping $19 billion loss because of his social media statement, more than twice the previous record one day loss of $8.5 billion back in 2021.
With markets in the US closed today, traders are bracing themselves for the impact Trump’s words will have as they come back tomorrow and we will see how the rest of the world reacts today.
Tuesday sees UK average earnings, unemployment and jobless claimant count figures released early doors ahead of the German and EU ZEW economic sentiment surveys at 10am. A speech by Bank of England member Alan Taylor winds things up after lunch at 1pm.
Wednesday is quieter, although we have EU industrial production figures at 10am. Despite the rest of the day being US data led and therefore unlikely to be released, at the time of writing it is expected the all important CPI inflation figures for the US will be released, as an apparent exception has been made to recall staff back to release the figures due to the importance of the figure for calculating social security payments.
Thursday, we have UK GDP released alongside industrial and manufacturing production, plus trade balance, all released early at 7am. EUR trade balance follows at 10am and then its across the pond where we don’t expect any data to be released. The day ends with two speeches from the European Central Bank with Philip Lane speaking ahead of President Christine Lagarde at 5pm.
Friday rounds off the week with EU CPI inflation readings at 10am, speeches by Bank of England members Huw Pill and Sarah Breeden plus European Central Banker Joachim Nagel in amongst a raft of US data releases unlikely to be released.
As always, speak to one of the team today for some friendly guidance on your currency requirement and let us help you, make your money go further.