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UK Data 

• Monday 7.00am Halifax House Prices for October. Previous 10.7%y/y
• Monday 9.30am CIPS Services PMI for October. Previous 56.7 index
• Monday 9.30am Industrial Production for September. Previous +0.1%m/m
• Monday 9.30am Manufacturing Production for September. Previous +0.4%m/m
• Tuesday 12.01am BRC Retail Sales for October. Previous +4.9%y/y
• Wednesday 12.01am Nationwide Consumer Confidence for October. Previous 99.0 index
• Thursday 12.00pm BoE MPC Interest Rate announcement.
• Friday 9.30am World Trade Balance for September. Previous -6.9bn

Last week saw Sterling trade firmer against both the weakening US Dollar and the stubborn Euro as the possibility of a November rate cut this week diminished. The Nationwide house price survey (9.7%y/y) showed the fastest pace of growth for 4 months highlighting that it’s not all doom and gloom with the UK housing market and comments from MPC member Kate Barker suggested that a cut in the months ahead is by no means a certainty. The main focus this week will be on Thursday’s interest rate announcement where a vote of no change is now widely expected. Nevertheless, the market will also pay particular attention to the plethora of data this week to gauge the timing of any future rate moves.
 

US Data

• Monday 3.00pm ISM Non-manufacturing for October. Previous 54.8 index
• Wednesday 8.00pm Consumer Credit for September. Previous $12.2bn
• Thursday 1.30pm Initial Claims for w/e 3^rd November.
• Friday 1.30pm Trade Balance for September. Previous -$57.6bn
• Friday 3.00pmUniversity of Michigan Sentiment for November. Previous 82.0 index

The main highlight last week was the FOMC interest rate announcement where the committee elected to cut the Fed Funds rate by 0.25% to 4.50%. The accompanying statement however was significantly more hawkish than expected highlighting that economic growth was solid in the third quarter and strains in the financial markets have eased somewhat. This was followed by a far stronger than expected US employment report which showed 166,000 new jobs created during October outside the agricultural sector while the unemployment rate held steady at 4.7%. Data this week is mostly second tier, however the highlight will be Friday’s trade figures to gauge whether or not the weaker Dollar of late has helped structural imbalances in the US.

Euro Data

• Tuesday 9.00am Services PMI for October. Previous 54.2
• Tuesday 10.00am PPI for September. Previous +1.7%y/y
• Tuesday 10.00am Retail Sales for September. Previous +1.0%y/y
• Thursday 12.45pm ECB Interest Rate announcement followed by News Conference at 1.30pm

The main highlight on a quiet calendar last week was the inflation data (2.6%y/y) which pushed alarmingly above the ECB’s 2.0% target rate. Consequently, the focus this week will be on Thursday’s interest rate announcement where, despite increasing pressure to hike again, we’d expect rates to be left unchanged given current market conditions. With this in mind, particular attention will be paid to the accompanying statement for any indication on the timing of the next move.

Interest rate outlook