The pound dropped across the board during the overnight trade after a report showed UK home prices fell the most in a year. Home sellers cut asking prices in England and Wales by 3.1%, the largest monthly drop since November 2010. There are no additional data release or policy speeches scheduled for today. Looking to the week ahead, minutes of the November MPC meeting and third quarter GDP data headline the economic calendar. On Wednesday Bank of England will release the minutes from its latest meeting, which are expected to show MPC members voted unanimously to keep Bank rate at 0.5% and the QE program unchanged at 275 billion pounds. It is expected that the committee will have stuck to its view that the outlook for the sustained economic growth remains uncertain. Third quarter GDP data will be published on Thursday, with the projections for the figures to remain unrevised at 0.5%. Also scheduled for this week is the Public finance release, with the expectations for the PSNBx (Public Sector Net Borrowing excluding Interventions) to have decreased to 6.5 billion pounds in October, after reaching 14.1 billion in the previous month. Expect for the pound to experience some downward pressure should we hear the Monetary Policy Committee is leaning towards additional monetary easing.
The euro remains under pressure as government debt in the euro-area countries reached record highs as debt crisis is spreading to the bigger nations, including Spain, Italy and France. In Spain, Mariano Rajoy’s People’s Party swept the ruling Socialist Party and committed to brace the difficult austerity measures in order to stir the country from the debt crisis. Looking to the week ahead, PMI Manufacturing and Services release headline the economic calendar, with the expectations for the figures to deteriorate further. Also scheduled or this week is the German Q3 GDP final reading, with forecasts for the numbers to remain unchanged at 2.5%. Finally, German IFO Business survey is scheduled for Thursday and the figures are expected to confirm economic slowdown in the European largest economy. Expect for the euro to remain extremely volatile as debt crisis is hurting the single currency.
The dollar gained during the Asian session on speculation US congressional committee will announce it failed to agree on deficit cuts, boosting demand for so called “safe haven” currencies. The deficit cutting congressional super-committee will probably announce that it has failed to reach agreement on federal budget savings, risking another credit downgrade by rating agencies. Looking to the week ahead, Tuesday’s publication of minutes from the Federal Open Markets Committee (FOMC) headlines the economic calendar. Market participants are going to look for any signs of additional fiscal measures anticipated by Fed as several central bank officials have publicly supported such a move. Also scheduled for this week are the Q3 GDP second reading and University of Michigan Consumer Confidence release. Expect for the greenback to remain supported against its major rivals as investors run for safety of the US currency.
Comments