Key Points from This Week

US, EZ & UK Manufacturing Rebound Continues

The flash manufacturing PMI’s for the EZ, US and UK this week all came in positively with the US and EZ both beating estimates while the UK reading was in line with expectations. The data confirms that the factory sector rebound is alive and well. While the UK reading was a little lower than the prior month’s it was still firmly above the neutral level.

RBNZ To Influence Interest Rates Lower Ahead of Next Rate Cut

The RBNZ struck a dovish tone at its September meeting this week. While the bank held rates on hold, reaffirming its commitment to keep its headline rate at current record lows of 0.25% until March 2021. However, the bank did detail plans for a funding for lending scheme which will come into operation over the coming months and effectively help to keep rates lower without the bank having to adjust the headline rate.

SNB Hold Rates Unchanged with More Optimistic Message

At the bank’s September meeting this week, the SNB said that the economic downturn in Switzerland had not been as severe as expected and held rates unchanged. However, the bank did outline plans to increase purchases of foreign currencies in a bid to stop excessive strengthening of the Franc as a result of safe haven inflows. The SNB also noted that it will publish more details on currency interventions in an effort to increase transparency and dispel claims of currency manipulation.

Key Events Next Week

Chinese Manufacturing PMI

The latest Chinese manufacturing data is due next week and traders will be keen to see if, as with the developed western economies, the Chinese factory sector has continued to recover.

US PCE

The next US Personal Consumption Expenditure reading is due next week. The data is used by the Fed as a key gauge of inflation and will be particularly interesting given the recently announced change in the way the Fed targets inflation now. Despite the shift in strategy, some Fed members this week hinted that the fed could still hike rates as inflation approaches the 2% level.

US Labour Reports

The headline data event next week is the release of the US jobs report. The last reading, while still firmly positive at 1.335 million jobs, was a little below the market consensus and reflects a clear loss of momentum from the initial jobs rebound seen over recent months. If September’s data shows a further loss of momentum this will raise further concerns over the health of the US recovery.

Keep An Eye On

Brexit Trade Talk Headlines

As the 15tH October deadline draws closer, both EUR and GBP, as well as EU & UK equities, are likely to become much more sensitive to headlines around the talks, especially as so far very little progress has been made.

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