Financial market research and analysis

It’s Columbus Day in the US so we can expect to see fairly low trading volumes today. The macro calendar is also sparse but we do have a number of central bankers on the dance card this afternoon so expect most of the gyrations to be FX based.

FOMC Lockhart is due to speak at 1pm at the Association for University Business and Economic Research's Fall Conference, in Orlando on the US economic outlook. Given the recent downward revisions by the IMF as well as a plethora of broker revisions, trader will be on tenterhooks looking for clues on the next tightening cycle. The probability of a move in December is now at 40% based on sovereign debt markets.

Martin Weale, a known BOE hawk is also due to provide his tuppence-worth when he speaks at the University of Groningen later in the afternoon. The pound has been steadily gaining against the dollar since falling to lows last seen in May in the early part of October. A lot of this upside has been down to a weaker dollar and the correlation to the euro. For the time being, the expectations for a near term rate rise has been pushed back, in part owing to the Fed dragging its feet but also owing to the risks presented by Brexit. The UK saw a nationwide loss of momentum in its economic growth in September. Growth, while remaining positive has continued to slow and September rounded off the weakest quarter of expansion in over two years.

As George Osborne himself tends to agree, ‘’I am very alert to the risks to the UK. We have a large budget deficit still, which needs clearing; our productivity performance is not nearly as strong as it needs to be; we don’t export enough; our record of building infrastructure is not good enough’’.