Oc­to­ber: A month to for­get!

Financial Mirror (Cyprus) - - MARKETS - Mar­kets Re­port b

may be cer­tain about is for volatil­ity to re­main el­e­vated es­pe­cially with the U.S. midterm elec­tions is just around the corner.

De­spite the rally in eq­ui­ties, the Dol­lar rose to its strong­est level in 16 months, reach­ing a high of 97.20 on Wed­nes­day.

The Green­back was sup­ported by a larger than ex­pected ADP em­ploy­ment re­port show­ing the U.S. pri­vate sec­tor pay­rolls in­creased by 227,000 in Oc­to­ber, the high­est in eight months. How­ever, the Green­back couldn’t hold its gains to­day as many ma­jor cur­ren­cies reached sig­nif­i­cant sup­port lev­els, par­tic­u­larly the Euro. For the Dol­lar to keep ral­ly­ing it re­quires Fri­day’s non­farm pay­rolls re­port to beat econ­o­mists’ ex­pec­ta­tions, es­pe­cially on wages. If wage growth ac­cel­er­ates fur­ther the Fed­eral Re­serve may have no ex­cuse to turn less hawk­ish, thus pro­vid­ing fur­ther push to U.S. Trea­sury yields.

The Pound ral­lied sharply on Thurs­day on re­ports that Theresa May had struck a deal with Brus­sels for Bri­tish fi­nan­cial ser­vices com­pa­nies to con­tinue oper­at­ing in Eu­ro­pean mar­kets af­ter Brexit. How­ever, with the U.K. re­main­ing far from strik­ing an agree­ment to re­solve the Irish bor­der is­sue, the cur­rency gains may quickly evap­o­rate.

Traders’ at­ten­tion will turn to the Bank of Eng­land mon­e­tary pol­icy de­ci­sion which is ex­pected to keep in­ter­est rates on hold. While Mark Car­ney’s speech and the Quar­terly In­fla­tion Re­port may move the Pound slightly, it’s still all about the Brexit deal that will de­cide the fate of the cur­rency.

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