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US Open Preview – Pound holds firm ahead of Barnier’s Brexit speech
November 5, 2018 1:26 pmVideo
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Here are the latest developments in global markets:
Day ahead: US ISM non-manufacturing PMI, RBA decision coming up; Barnier to deliver Brexit speech
The ISM’s non-manufacturing PMI will be hitting the markets in the early hours of US trading. Beyond this and during Tuesday’s Asian session, the Reserve Bank of Australia (RBA) will be deciding on rates, while Japanese household spending figures are also slated for release. Elsewhere, the EU’s chief Brexit negotiator Michel Barnier will be delivering a speech on Brexit.
At 1500 GMT, the US ISM non-manufacturing PMI will be made public. The gauge is anticipated to fall from September’s 61.6, the highest since the index’s creation in 2008, to 59.3, which would also be a robust print. Barring a significant deviation from expectations, the release is not likely to prove a major market-mover. Meanwhile, politics are taking center stage in the US, with the midterm elections concluding on Tuesday.
A risk-event for sterling will be Barnier’s Brexit speech set to take place in Brussels at 1930 GMT. Should he reinforce the reports suggesting progress on Brexit negotiations, then the pound is likely to extend its recent gains versus major currencies, including the dollar and the euro. If instead he focuses on the impediments that hold the two sides away from a Brexit deal, then the British currency is expected to retreat.
Back on the data-front, Japanese household spending figures are due at 2330 GMT. Spending is projected to have contracted on a monthly basis in September after recording an unexpected jump in August.
Having more potential to prove market-moving during Tuesday’s Asian session will be the RBA’s policy decision due at 0330 GMT. The central bank is widely anticipated to yet again maintain its benchmark rate at a record low of 1.5%. In light of this, the Bank’s communication – how optimistic it is on the economy – is expected to dictate the Aussie’s movement in the aftermath of the decision.
ECB Vice President de Guindos and the Bank’s Chief Economist Praet will be speaking in Brussels, where eurozone finance ministers will also be meeting to discuss euro area integration.
Lastly, global trade considerations remain in the background with any updates having the capacity to rattle the markets. There was some optimism for de-escalating tensions between the US and China last week that spurred risk-on trades, though White House economic advisor Kudlow later downplayed the odds for a quick deal with China. For the record, Presidents Trump and Xi will be meeting at the G20 summit at the end of the month.
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