The Dollar is marginally stronger across the board although in trade-weighted terms it remains within an extremely narrow range for the fourth consecutive session.
Sterling is underperforming, with the GBP/USD cross down 0.7% from yesterday to a 7-session low of 1.283 as markets await the EU’s decision, reportedly on Friday, on whether to extend negotiations with the UK beyond 31st October. The consensus forecast is that the EU will give the UK more time to get a Brexit deal through parliament but that there is some disagreement as to how much time Prime Minister Johnson’s government needs and should be given.
The Euro has only weakened incrementally today despite another weak set of Eurozone PMI data and the ECB’s bearish outlook for European economic growth and inflation. Preliminary data for October show that the composite PMI, a forward-looking indicator for economic activity, was broadly stable at 50.2 in October – with an index below 50 indicating contracting economic activity. A lot was made of the fact that this was ECB President Draghi’s last policy meeting but, as expected, the ECB announced no new monetary easing measures. Draghi, who will officially step down on 31 October, has president over a very stable Euro but ultimately failed to reflate the Eurozone.
