A new week and a new direction for markets. Early risk appetite is in decline and stocks are being heavily sold thus far as a sea of red across all major global indices welcomes us into the start of the week. This follows last week, where central bank easing, or the promise of loose policy saw artificially inflated appetite drive European stocks to fresh two weeks highs where US markets posted record highs. GBP has started the week under selling pressure, a late rally in the pound through Friday failed to be sustained and selling from the beginning of the European open has seen EURGBP look to challenge towards .8700 and towards post Brexit highs of .8725 with GBPUSD trading back towards 1.2930 from overnight highs just shy of 1.3000.
With central banks now behind us, our attention turns back to the data and this week has some key releases, most notably in the US. Consumer confidence, durable goods, trade balance data and GDP figures all cross the wires from Tuesday onwards, while we have a whole host of various Fed commentary this week as well, including Janet Yellen testifying before the Senate house panel. The USD remains subdued thus far, still trading just above last week’s post FOMC lows, but any sign of unification amongst Fed speakers, of reassurances they are ready to raise rates in December, will favour a stronger USD.
Eurozone data this week also provides some key points, with Draghi due to speak on several occasions, while we also have key inflation data later in the week. Draghi continues to look to place the onus on individual governments, as opposed to the ECB, but with the ECB appearing to hold off on any additional easing for now. This gives the Euro upside potential especially should the USD and GBP continue to struggle for any meaningful traction.