Last week we saw UK/EU trade talks continue with Sterling nudging higher as hope for a deal continues to grow as the time to complete discussions extends and erodes. EU Chief Negotiator Barnier stated that a deal was unlikely by the October 15-16th Summit and instead the meeting will be used as a stock checking exercise to understand the state of play. There were also reports that Barnier had been instructed to keep a hard-line position on fishing, however, UK Chief Negotiator Frost hinted that fishing measures could be phased in – a big change in tone to what has been stated previously. Ongoing signs of progress helped keep Sterling elevated. While Bank of England Governor Bailey stated that the economic recovery had been very uneven across the country and that risks are very much to the downside. He commented that he strongly hoped that there would be a Brexit deal, but the post-transition period would not be easy. He also commented that we must use policy aggressively and actively with the bank by no means out of firepower.

In Europe, market data was quiet but, not without some rhetoric from the central bank. The Euro was hampered by fresh speculation that ECB President Lagarde would signal that the central bank would move towards further monetary easing, including the possibility that interest rates would be pushed deeper into negative territory. ECB President Lagarde reiterated that the bank does not target the exchange rate but is paying close attention to exchange rate developments.

Fed Chair Powell reiterated that all measures should be explored to manage downside risks to the outlook, there is still a long way to go in the recovery with the outlook remaining highly uncertain. The Fed chief reiterated that negative interest rates were not a tool that the bank was looking to use. Much of the focus in the US was on President Trump being discharged from hospital after testing positive for COVID.

Looking to the week ahead economic data calendar is light in the UK and the Eurozone but busy in the US. The only UK official data is Tuesday’s labour market report. However, ongoing trade talks and COVID updates will keep markets interested. In the US, growth data has continued to be mixed but leans towards the upside as consumer spending remains strong. Friday’s retail sales will be of interest to see if this continues. Also, the weekly jobless claims are set for release.


  • US Bank Holiday
  • BoE Bailey Speaks

The US markets will be closed on Monday as the US celebrates Columbus Day. In the meantime, BoE Gov. Baily will be speaking at a BoE virtual forum. As head of the central bank, the market will keep a close eye on his comments for clues on future policy action. The market continues to speculate on both QE and the use of negative interest rates.


  • BRC Retail Sales
  • UK Labour Data
  • German ZEW Survey
  • US Inflation

It is a busy day on Tuesday as the market focuses on all three major regions. Overnight the British Retail Consortium release their numbers which will provide some insight to consumer spending. The UK labour data is forecast to show a further modest rise in the unemployment rate in the three months to August to 4.3% (from 4.1% in July) and a fall in employment of 30k. That would still leave unemployment at a very low level, considering the ongoing impact from the pandemic. However, it will tell us a little about what will happen when the government’s furlough scheme closes at the end of October.

Outside of the UK, the German ZEW survey will provide the first indications of October economic trends whilst the inflation data will keep the market interested.


  • US Factory Inflation
  • BoE Haldane Speaks

Following on from Tuesday’s headline inflation numbers, the market will see if the US factory level inflation follow the same trend. BoE Chief Economist Haldane is also due to speak at the Engaging Business Summit Autumn Lecture. His comments will be closely monitored for clues on how the BoE is currently thinking.


  • US Philly Fed Manufacturing
  • US Weekly Jobless Claims

Philadelphia Fed’s surveys will provide some of the first indications on October trends whilst these can be very volatile, the market will pay attention to the growth aspects. Given the current lead into the US Presidential Elections, the market will focus on the weekly jobless claims which remain at an elevated level. At the time of writing Democrat Biden has a 65% probability (RealClearPolitics – 11/10) of winning the White House.


  • US Retail Sales
  • US UoM Consumer Sentiment

Friday sees the release of two consumer indicators. Firstly, the US Retail Sales will be monitored for a view of economic spending during this pandemic and reveal if a localised lockdown is impacting the wider picture. Meanwhile, the UoM consumer sentiment is more forward-looking and may highlight the future trajectory of consumer behaviours.

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