23 October 2017
The increased prospect of tax reform in the States has seen bond yields rise and the dollar advance over the last week. The lack of deterioration on the North Korean front has also allowed the dollar to claw back some lost ground but with a December rate hike already being counted on, it will take further progress on these issues to see the greenback make meaningful headway.
Meanwhile, the pound has been caught between support from the potential for a rate hike over the next couple of months and headwinds from soft data and Brexit uncertainty.
The euro had a mixed week but there was a reluctance to push boundaries ahead of this Thursday’s ECB policy meeting. This despite increasing tensions in Spain after the government announced it would invoke Article 155 and impose rule of the region, a move which has unsurprisingly been opposed by Catalan President Puigdemont.
Nothing major on the calendar today but plenty to look forward to over the week. Tomorrow, we have Eurozone PMI flash estimates, on Wednesday the German IFO, UK Q3 GDP and US Durable goods orders are the highlights and on Friday we have US Q3 GDP. However, the primary focus for the week is on Thursday when the ECB is finally expected to announce asset purchase tapering.
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