Sterling has begun the day trading in line with yesterday’s opening levels as the market continues its cautious tone amid this month’s slew of central bank rate decisions. On Tuesday, Sterling managed to gain traction against its major peers following upbeat CBI retail trade figures. The CBI’s monthly distributive trade survey showed the headline sales balance for retailers picked up to +30 in October from +11 in September which was its lowest level since March, economists had expected a reading of +13. However, sterling’s gains were short lived as the survey’s measure of stock adequacy dipped to -23 in October, the seventh month in a row that it hit an all-time low, proving the market continues to suffer with disruption to supply chains, staff shortages and uncertain public health conditions. Chancellor Rishi Sunak will deliver his Autumn Budget on Wednesday at 12.30pm. The £7 billion aid to the NHS and a move to hike the minimum wage to £10 look to be the promising offers from Mr Sunak. However, the market awaits to see how he manages to tame the record budget deficit and the surging inflation.


The dollar gathered strength on Tuesday following the release of strong data but settled in the afternoon session as investors gear up for key events and data releases. Yesterday, US data showed New Home Sales climbed by 14% in September, compared to the expected 1.5%. Additionally, the Conference Board’s Consumer Confidence improved to 113.8 in October from 108.3 in September. However, market sentiment has dwindled ahead of the release of US Durable Goods Orders for September, expected -1.1% versus +1.8% prior. Meanwhile, the 10-year US Treasury bond yield edged lower on Tuesday and seems to have gone into a consolidation phase between 1.6% and 1.65%.


This morning’s German Gfk Consumer Confidence came in better than expected at 0.9 versus -0.5 expected, but this only saw the euro make modest gains of around 0.1% against GBP and USD. The euro continues to trade in a very tight band ahead of the European Central Bank’s closely watched policy meeting on Thursday. Despite news on Tuesday that inflation expectations for the euro zone among bond investors have reached a seven-year high above 2.07%, it is still expected that the ECB will strike a dovish tone when it meets. Elsewhere, Thierry Breton, the European Union’s internal market Commissioner termed Brexit as a catastrophe and blamed it for causing shortages. Brexit negotiations continue as The Times reports, “France intends to retaliate against Britain’s refusal to offer more permits for French fishermen working in British inshore waters and is likely to announce its measures today.”

Economic Calendar

12:30pm US Durable Goods Orders (Sep)
14:00pm Bank of Canada Interest Rate Decision