- A few takeaways from the US last week: Better-than expect data (Retail sales, industrial production, and jobless claims) complements the idea of Fed Chairman Powell that the economy is resilient and could require further tightening. But let’s not forget about growth, which is still set to slow, credit availability is diminishing and the tensions in the middle east – all these factors indicate that a hold can be the right choice for the Nov.1 FOMC meeting.
- The US dollar starts the week higher against its peers, driven by interest rate differentials and as haven flows are unwound as Israel let aid arrive in Gaza over the weekend.
- Key data this week: S&P PMIs (24 Oct.), New Home Sales (25 Oct.), GDP Annualized QoQ (26 Oct.), Durable Goods Orders (26 Oct.), Initial Jobless Claims (26 Oct.) Persona Income & Spending (27 Oct.).
- In the euro-area, monetary policy will be in the spotlight, with the ECB set to hold interest rates at its meeting on Thursday. Latest economic data suggests economic risks are on the rise – weak PMI Surveys and ECB’s Bank lending survey combined with the decrease in credit supply – all these factors point to a risk of a hard landing.
- Key data this week: Euro-area flash Composite PMI (24 Oct.); Euro-area Money Supply (25 Oct.); ECB Main Refinancing and Deposit Facility rate (26 Oct.)
- The euro trades around 1.0580, getting back to the bearish channel that it tried to break last week at 1.06.
- In the UK, focus will be on the UK unemployment data where signs of further cooling are needed and on the UK Flash Composite PMI, to understand how the economy is coping under tight financial conditions.
- Key data this week: UK Unemployment rate (3M) (24 Oct.); UK Flash Composite PMI (24 Oct.).
- Sterling is lower amid view of higher Treasury yields, trading at 1.2164.
- Oil is lower as we start the week as Israel halted its ground invasion of Gaza amid diplomatic efforts to the release of more hostages.
