We start the week with the US dollar left unchanged despite concerns of a government shutdown in the coming days. Congress has until the end of the week to pass a new Stop Gap Bill before funding runs out after November 17th. In addition, this will be a busy data week for the US with key inflation data, the latest CPI release on Tuesday, followed by PPI on Thursday. A dip in the US October Inflation Report is expected. However, it remains clear that inflation is still a long way off the Fed’s 2% target, keeping the Central Bank on a potentially tightening bias despite holding rates at the last policy meeting.
Wednesday sees the release of US Retail Sales, which are expected to have slowed, driven by a decline in new vehicles and gasoline sales. The US published The Empire manufacturing survey on Wednesday with Initial Claims, Philly Fed, the Business Outlook, and Industrial Production all out on Thursday.
This could be a key week for the Pound as well as UK data as markets await the October inflation report on Wednesday. This is expected to print below 5% for the first time in two years. An inline print would ease pressure on both the government and the Bank of England, which kept rates unchanged for the second consecutive meeting. On Wednesday, we see the release of the October unemployment report and retail sales due out on Friday. The pound remains soft, having slipped at the end of last week towards 122, and it remains at a critical level around which this currency will pivot. Support is seen at 120, and last week’s high of 124-125 is seen as initial resistance. The Sterling Euro remains range-bound over the pond. The single currency is treading water, with the euro-dollar just hovering below 107 as markets await Tuesday’s German Zew report and the final reading in the Euro area of CPI for October, due on Friday. This final update is expected to confirm that the underlying price pressures are Subs are stabilizing, given the ECB’s confidence to keep interest rates unchanged.
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