We start a new month and quarter which is likely to be increasingly taken over by the impending Presidential election in the US, something which the market has largely managed to ignore up to now. To this end, the impending US employment report, due for release at the end of this week, could struggle to the usual impact on markets, given that current market pricing has less than a 20% chance of the Fed moving rates less than a week before the election. The December meeting is another matter, where the pricing puts the chances of a move as more likely than not, but given the Presidential election, that could well change substantially between now and then depending upon the result.
Looking to today, we start the week with sterling having gapped lower after the UK PM finally put a timeline on the UK’s exit from the EU. We’ve seen cable break below the 1.29 level at the start of the European session, whilst EURGBP is close to making new highs for the year, which could trigger further bearing activity on the sterling if seen. Elsewhere, the yen continues to retreat, allowing USDJPY to once again pull away from the 100 level. The Tankan survey overnight showed mixed messages on the state of the Japanese economy. Deutsche Bank is never far from the headlines, with much talk over the weekend from the German political establishment as to where we go from here. For today, we see UK PMI data at 08:30 GMT, with US USM data following at 14:00 GMT. Trading is likely to remain muted ahead of the US jobs numbers on Friday.