Is everything out of the briefcase?
Today is Autumn Budget Day in the UK. However, with the Speaker of the House of Commons criticising the Chancellor for leaking the details of his measures, no great surprises are expected when Rishi Sunak takes to the dispatch box early this afternoon. Sterling again had a good day, mainly in anticipation of the Bank of England raising Interest Rates next week and is holding the higher levels it has attained recently.
If any encouragement for the Old Lady to hike interest rates next week was needed, it came yesterday when a monthly survey from Citibank revealed that the UK's expectations for inflation over the next year jumped to 4.45% this month, its highest level since 2008.
With one day to go to the monthly meeting of the European Central Bank, the euro is continuing to struggle against its peers. At the risk of being monotonous, the single currency's issue is the ECB's reluctance towards tightening policy. It is unlikely that it will regain too much ground against either the dollar or sterling whilst the central bank retains its dovish outlook compared to others, such as the Bank of England and the US Federal Reserve.
This morning Gfk reported that German Consumer Confidence had almost returned to pre-pandemic levels but ahead of tomorrow's meeting the market's response was understandably muted.
The dollar is broadly unchanged after a day of mixed fortunes, and with no clear price driver, it could be in for a similar uneventful trading session this morning. In the background, China's Evergrande Group may be making a return to the spotlight after its shares fell in Hong Kong this morning. This may encourage some risk related dollar buying if sentiment turns sour later today.
With no speakers scheduled, as the Federal Reserve is in blackout ahead of its monthly meeting next week, the market will turn its attention to Durable Goods orders this afternoon and may start fretting about the upcoming month-end rebalancing shenanigans on Friday.