Calm returns to markets (video)

Currencies Direct October 20th 2014 - 2 minute read

After two weeks of heightened market volatility, a period of calm — even for a few days — is exactly what is needed. There is little data of note due out today, and the rest of the week is also light on big-ticket economic releases.  
 
From what is on the calendar over the coming days, focus will turn to the US with existing homes sales, CPI, jobless claims and the manufacturing PMI all due by Friday. The overall picture of slow-but-steady improvement in the US economy is expected to continue with house sales ticking higher and manufacturing activity set to remain positive. We will, however, see a slight drop from quarter three which showed a very rapid rise in activity. CPI data is expected to mirror the continued fall in energy prices, with the headline figure expected to show flat prices in September with the core figure (excluding food and energy) forecast to show a slight increase of 0.2%. Overall the yearly picture is expected to stay flat at around 1.7%. Data this week is unlikely to force the dollar out of tight trading ranges against the euro and pound.
 
Germany’s current economic performance remains one of many issues the market is currently trying to figure out. The slowdown could be economic sanctions on Russia (with whom Germany does a lot of trade) biting or it could be something more fundamental, at this stage it remains unclear. On Thursday German manufacturing and services PMIs provide an update into their economic landscape. The picture is expected to remain unclear with manufacturing showing a slight contraction in activity but services remaining in expansion.
 
The Bank of England minutes are released on Wednesday but after Andy Haldane’s comments last week about rate rises being further away than previously thought, it would be a huge surprise if we saw any more than the current two members of the MPC voting for rate increases. Friday sees another estimate of Q3 GDP with the possibility of minor upward adjustments to the headline figure of 0.7%.

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