'Risky' two-weeks ahead on financial markets

Heavy US data, the Presidential campaign and the closing of a volatile trading month will all contribute to an uncertain week ahead..



GBP
The Pound is set for the biggest 4-week drop in a year versus the USD, as investors flock to the safe-haven currency amid both political and economical choppy waters.

On Wednesday, we will witness the first Labour Budget in 14-years and it's one that has garnered a lot of attention. No-one is expecting a GBP meltdown like we saw with Liz Truss' aborted mini-budget of 2022, but it certainly is a high-stakes budget nonetheless that could have big ramifications for financial markets..

Finance Minister Rachel Reeves wants to change the measure of public debt that the Government targets, to allow for more money in borrowing for investment. There will be winners and and there will be losers as far as consumers are concerned come Wednesday, but the initial reaction will be from traders and investors in how they interpret the debt rule change and this will move Sterling.  

GBP v EUR has been somewhat unmoved by US events and the UK Budget thus far, which just highlights traders and investors are more focused on BoE v ECB on interest rates, as-well-as the psychological barrier of 1.20 when it comes to open positions.




EUR
The Euro has the potential of creating some movement of its own this week with inflation data. Last time out, both the Spanish & German readings sunk the Euro as inflation fell quickly below the 2% target. Let's see if the same plays out and all-but-confirms near-term interest rate cuts from the ECB (creating € weakness) or whether the inflation position has improved slightly which may bump the Euro.



USD
The Dollar is going from strength to strength and is likely to outperform this week too. Markets are mainly 'nervous' ahead of the US Presidential vote next week and when this happens, risk-off mood occurs. The latest odds are showing a 60% chance of a Trump victory and we expect the Dollar to gain both near and long term versus all currencies if this should happen.

Before that though, arguably the marquee driver this week is the US jobs release. October has seen a more robust US economy after wobbling somewhat the previous few months and a strong labour market could delay further interest rate cutting from the Fed, which would then strengthen the Dollar further. 



Expected mid-market ranges for October 28th 2024

gbp
GBP
usd
USD

    $1.2925 - $1.3025    


gbp
GBP
eur
EUR

    €1.1950 - €1.2025    

Upcoming Data
Monday 28th October 2024
N/A



Tuesday 29th October 2024
12:30 US - Goods trade balance
14:00 US - Consumer confidence & job openings


Wednesday 30th October 2024
06:30 EU - French consumer spending & GDP
08:00 EU - Spanish inflation
08:55 EU - German unemployment
09:00 EU - Italian GDP
09:00 EU - German GDP
10:00 UK - Autumn forecast statement
10:00 EU - Euro-Zone consumer confidence & GDP
12:15 US - Non-Farm employment change
12:30 UK - Spring statement
12:30 US - GDP
13:00 EU - German inflation
14:00 US - Pending home sales



Thursday 31st October 2024
07:00 EU - German retail sales
07:45 EU - French inflation

10:00 EU - Italian & Euro-Zone inflation & unemployment rate
12:30 US - Initial/continuing jobless claims, personal income/spending & PPI
20:30 US - Feds balance sheet




Friday 1st November 2024
06:45 EU - French Government budget balance
12:30 US - Average earnings, non-farm payrolls & unemployment rate
14:00 US - Manufacturing PMI




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