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The European Central Bank chose to keep interest rates unchanged at 4.5% in October and as a result, the euro lost 0.25% and 0.5% against the pound and US dollar, respectively.
Economists were prepared for this decision but were eager to determine if ECB policymakers saw room for future rate hikes. The significant shift from its 15-month hiking streak signalled a more cautious “wait and see” approach.
Yesterday was awash with high-impact data releases and markets heard the US economy grew more than expected in quarter three of 2023, expanding by an annualized 4.9% in the three months to September. This is the largest period of growth since the final quarter of 2021 and exceeded expectations of 4.3%. The growth was supported by a 4.0% rise in consumer spending.
New orders for manufactured goods in the United States surged 4.7% month-over-month in September, rebounding from a 0.1% contraction a month prior and significantly surpassing a market consensus of a 1.7% rise. This marked increase was largely driven by strong demand for transportation equipment.
The boss of the UK supermarket chain, Tesco, Jason Tarry, will leave the business in March and be replaced by former Aldi boss, Matthew Barnes. Tarry, aged 56, has not revealed what he plans to do but said it was “the right time to move on” after 33 years with the company.
Shares in Siemens Energy plummeted by 29.0% yesterday following reports that the company’s CEO, Chrisitan Bruch, is in talks with the federal government for several billion euros in guarantees.
This morning the consumer confidence in France rose to 84 in October from 83 in September and higher than expectations of 83.
Later today, economists will receive personal spending data on US consumers and the core PCE price index figures for September.
Next week is jam-packed with potentially market-moving economic releases including German inflation, Germany’s GDP growth rate, eurozone growth rate and inflation. However, it’s the Federal Reserve that’ll be in the spotlight next Wednesday as it’s expected to keep rates unchanged at 5.5%.
The Bank of England’s next interest rate decision is next Thursday and like the Fed, is expected to hold the Bank rate steady at 5.25%.
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GBP: Britain’s retail sector in a dangerous position
New distributive trade figures from the CBI reveal that UK retail sales fell in the year to October and at a faster pace than in September. This marks the sixth consecutive month of decline, and the CBI expects sales volumes to continue the downward trend.
GBP/USD: the past year
EUR: Economy “remains weak”
At yesterday’s ECB press conference, president, Christine Lagarde, said the euro area economy “remains weak”. She touched on tighter financing conditions and the weakening services sector which are weighing on investment and spending.
She added, “As inflation falls further, household real incomes recover and the demand for euro area exports picks up, the economy should strengthen over the coming years.”
USD: shekel at 10-year low
As geopolitical tensions continue to rise in the Middle East, the Israeli shekel, lost 0.25% against the dollar yesterday, falling to a 10-year low.
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