Risk appetite strengthened with optimism that US-China trade talks would make headway this week.

Overall risk appetite strengthened slightly with some optimism that US-China trade talks would make headway this week, but markets were tentative given fragile overall sentiment.

The dollar recovered as EUR/USD failed to break 1.1000 with only marginal trade-weighted gains as all major currencies suffered from fundamental doubts.

Sterling was hampered by a lack of positive Brexit developments. US equity markets lost ground, but global indices posted net gains while bond yields moved higher.

Oil prices secured some support from Middle East tensions despite unease over demand conditions. Demand for precious metals was subdued given a slight recovery in risk conditions.

Scandinavian currencies remained under pressure amid growth fears with the Swedish krona sliding to record lows.

The Euro-zone Sentix investor confidence index declined to -16.8 for October from -11.1 the previous month which was below consensus forecasts and the weakest reading since April 2013. The data maintained a lack of confidence in the Euro-zone outlook, although reaction was muted. Narrow ranges prevailed ahead of the New York open which is often the case on the Monday following the monthly US employment release. German yields edged higher, but yield spreads did not move in favour of the Euro as US yields moved higher on the day.

The Halifax recorded a 0.4% UK house-price decline for September with the annual increase held at 1.1% from 1.8% previously, maintaining expectations that political uncertainty was undermining the housing sector.

A Scottish judge rejected a call to force Prime Minister to seek a Brexit extension if there was no deal by October 19th as he stated that there was no doubt that he would comply with the law.

According to media reports, the EU detailed its fundamental objections to the UK government’s Brexit proposals, although negotiations will continue. Sterling was unable to gain ground when global risk conditions improved.

Overall, there were no positive Brexit developments during the day which hampered Sterling, especially with further warnings over the implications of any ‘no-deal’ Brexit outcome. GBP/USD settled just below 1.2300 while GBP/EUR dipped towards 1.120 before stalling and there was little change on Tuesday.

Economic Calendar

Expected Previous
06:45 CHF Unemployment Rate n.s.a.(SEP) 2.20% 2.10%
06:45 CHF Unemployment Rate s.a.(SEP) 2.10% 2.30%
07:00 German Industrial Production (M/M)(AUG) -0.20% -0.40%
09:20 BoE MPC Member Haldane Speech - -
10:30 BoE MPC Member Silvana Tenreyro Speech - -
13:15 CAD Housing Starts(SEP) - 226.6K
13:30 CAD Building Permits (M/M)(AUG) 2.30% 3.00%
13:30 USD PPI (M/M)(SEP) - 0.10%
13:30 USD PPI (Y/Y)(SEP) 1.70% 1.80%
13:30 USD PPI Ex Food & Energy (Y/Y)(SEP) 2.20% 2.30%
13:30 USD PPI Ex Food & Energy (M/M)(SEP) 0.20% 0.30%
18:35 Fed President Evans Speaks - -
18:50 USD FOMC Member Powell Speech - -
22:00 FOMC Member Kashkari Speaks - -

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.