Forex: the Euro and the pound rose, the dollar weakened

Were published the following data:

(time/country/index/period/previous value/forecast)

05:45 Switzerland unemployment rate (without seasonal adjustments) September 3% 3% 3.0%

06:00 Germany balance of payments, billion August from a Revised 19.6 19.4 17.0 17.8

06:00 Germany Trade balance (without seasonally adjusted), bln August from a Revised 19.6 19.3 20.0

06:45 France Change in industrial production, m/m Aug 0.5% Revised from 0.8% 0.4% -0.3%

08:30 UK Industrial production m/m Aug 0.3% Revised from 0.2% 0.2% 0.2%

08:30 UK Industrial production, yoy, August 1.1% Revised from 0.4% 0.8% 1.6%

08:30 UK Manufacturing output, yoy Aug 2.7% Revised 1.9% 1.9% 2.8%

08:30 UK manufacturing Production m/m Aug 0.4% Revised from 0.5% 0.2% 0.4%

08:30 UK Total trade balance Revised balenciagas -4.24 -5.63 -5.34 -2.800

12:00 UK Assessment of changes in GDP from NIESR September 0.4% 0.4%

12:15 Canada housing starts housing starts September 223.2 210.0 217.1

12:30 Canada building Permit, m/m August -3.5% -1.0% -5.5%

The pound strengthened against the dollar as it increased the likelihood that expected in November, raising the key interest rates of the Bank of England will be the beginning of the tightening cycle of monetary policy. This is because on Monday, the National Bureau of statistics UK (ONS) acknowledged that the costs of labor in the 2nd quarter rose 2.4%, not 1.6% as reported Friday.

Revised data “strengthened expectations that the Bank of England will start to raise rates,” say Bank of Tokyo-Mitsubishi UFJ. This situation will be to support the pound, if only the negotiations for a Brexit will not come to a standstill.

MUFG expects to raise the key rate of the Bank of England in November and said: “it Seems reasonable to expect one or two more increases in rates next year if the UK will be able to reach an interim agreement with the EU for a period of approximately two years.”

The pound also received support from data on industrial production in the UK, which have surpassed forecasts. The growth of British industrial production slowed for a second straight month in August, according to the National Bureau of statistics UK (ONS) on Tuesday.

Industrial production in August rose 0.2 percent from the previous month, lower than the growth in July by 0.3 percent. It was the fifth consecutive monthly increase.

The expansion largely was driven by manufacturing output which grew by 0.4 percent. Meanwhile, mining and quarrying declined by 2.0 percent.

In annual terms, growth in industrial production in August rose to 1.6 percent from 1.1 percent in July. The expected growth rate was 0.9 percent.

The manufacturing production in August increased by 2.8 percent per annum, exceeding the forecast of economists, the growth of 1.9 percent.

Another report from ONS showed that construction output in August rose 0.6 percent from July, mainly due to growth of 1.7 per cent of total new orders. He was expected to remain unchanged during the month.

The Euro rose against the dollar, but the rally halted at $1.18, against a backdrop of increasing concern about the speech of the President of Catalonia Carles Pokdemon to the regional Parliament, in which he can proclaim the independence of the region.

“Investors today are eager to obtain confirmation that the voltage in Spain can subside,” he wrote in a note analysts at Commerzbank.

In addition, investors consider Italy as the next potential source of political risk for the Eurozone. Parliamentary elections should be held no later than may 2018.

Earlier support for the Euro has provided data on trade and balance of payments of Germany. Trade balance, published by the Statistical office of Germany (Destatis), in August, without taking into account seasonal fluctuations amounted to 20.0 billion euros, higher than the previous value of 19.6 billion euros (revised from 19.3 billion euros).

In a report, Destatis noted, the balance of foreign trade of Germany increased in August as exports grew faster than imports.

Exports increased in August with a seasonally adjusted 3.1% compared to the previous month, when growth was only 0.2%. Economists had expected a growth rate of 1.0%. Imports grew at a slower pace of 1.2 percent after increasing 2.4% in the previous month.

As a result, the surplus in the trade balance, adjusted for seasonal variations increased to 21.6 billion Euro with 19.3 billion Euro in the previous month. Economists had expected the surplus to increase to 19.5 billion euros.

Annual export growth declined to 7.2% from 8.0%. Similarly, imports increased by 8.5% after expanding 9.6% previously.

The current account of the balance of payments showed a positive balance in the amount of EUR 17.8 billion in August vs € 16.9 billion in the corresponding month last year. The expected balance was a surplus of 17.0 billion euros.

EUR/USD: during European session the pair rose to $1.1806

GBP/USD: during European session the pair rose to $1.3202

USD/JPY: during the European session the pair fell to a Y112.25

At 14:00 GMT in the United States with a speech by fed Kashkari. At 18:00 GMT in Canada will be a performance by the first Deputy head of the Bank of Canada’s Wilkins. At 23:30 GMT Australia will release the consumer confidence index from Westpac in October. At 23:50 GMT Japan will report the change in orders for machinery and equipment for August.

Information-analytical Department Forex club

Forex: the Euro and the pound rose, the dollar weakened 10.10.2017

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