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US President Donald Trump pulled the plug on further fiscal stimulus until after the US election in November, causing uncertainty in the US and reducing the value of the US dollar in the major currency talking point last week.  

Rising expectations of monetary stimulus from the Federal Reserve (FED) and increasing risk sentiment have also undermined the dollar. 

Good week for the pound 

Sterling benefitted, rising from the mid US$1.29s to above $1.30.  

Reports of progress in the trade talks with the EU also supported the pound. There is now an expectation that the negotiations will continue after 15 October – a deadline both sides had previously set for reaching a deal. 

Steady against the euro

The pound-to-euro rate has flatlined in recent weeks, holding at around the €1.10 level.  

The currencies both carry risks due to the uncertainty around the talks and there is unlikely to be much movement in their value until after the upcoming EU leaders’ summit. 

Rebound is slowing 

Purchasing Managers’ Indices around the world showed continued growth but the general impression is that the rebound from the coronavirus pandemic is slowing in developed nations. 

As fresh local lockdowns continue to be introduced, there is growing concern of a spike in global unemployment as government schemes are rolled back. 

Equities firm 

Equity markets firmed towards the close of last week, with investors considering Trump’s decision to stop the US fiscal stimulus talks as a purely political ploy. There is a consensus that neither side in the election wants to be perceived as blocking much-needed economic support.  

Fears that Trump could contest the result of the election have also diminished, lifting some of the recent pressure on stocks. Most global equity benchmarks closed the week in the ascendancy with the FTSE approaching the 6,000 mark after dipping below 5,900 earlier in the week. 

Oil benefits 

Oil rose from its opening low of just above US$37.50pb to as high as $41.50. It starts this week at around the $40pb level. 

Metal gains 

Precious metals also saw gains last week. Gold consolidated its value in the low US$1900s while silver – which had briefly dipped below $23 per ounce – rallied sharply to close the week back above the $25 mark.  

Bitcoin up by a tenth 

Bitcoin also had a strong week, increasing almost 10% from its weekly low and opening the week holding in the US$11,350 region. 

Week ahead 

EU leaders summit focus for the pound and euro 

What had been billed as a make-or-break week in the UK-EU negotiations – with the EU leaders summit starting on Thursday – is now being seen as a time to gauge how the talks are progressing.  

Cautiously optimistic reports have underpinned the pound over the last few trading sessions, but traders will be hanging on every word to come from the two-day meeting.  

The press is currently reporting that gaining French President Macron’s approval is the main stumbling block as far as the fishing rights issue is concerned. There are rumours that other EU leaders are losing patience with Macron’s position.  

Employment figures 

Markets will be keeping an eye on the UK Employment report tomorrow with the expectation of a slight rise in unemployment from 4.1% to 4.3%. A far sharper increase is anticipated later in the year as the government’s job retention schemes are wound down. 

Several central bank figures are also to make speeches this week and traders will be focussing on any hints around monetary policy changes – especially in the UK where the spectre of negative interest rates is casting a heavy shadow over the pound. 

All eyes on stimulus progress 

This week in the US could start slowly due to the US Columbus Day bank holiday today. The US Banks Q3 earnings report is published tomorrow, which could determine what direction equity markets take next.  

The main talking point for US equities will be whether there is any sign of a US stimulus package agreement or at least some targeted government spending on the most hard-hit sectors, such as airlines and the hospitality sectors. 

Economic Data   

Highlights this week include: 

Today (12 October) 

  • Speeches by the Monetary Policy Committee’s (MPC) Ramsden and Haskel, Bank of England (BOE) Governor Bailey and the European Central Bank’s (ECB) Schnabel, Panetta and President Lagarde  


  • UK Retail Consortium Sales monitor and employment report 
  • German inflation for September and ZEW sentiment survey 
  • US September inflation report and Federal Budget balance 
  • OPEC monthly report 


  • Eurozone industrial production report 
  • US Producer Price input release 
  • IEA monthly report and US API Weekly crude stocks 
  • UK MPC member Haldane speaks 


  • EU Leaders Summit begins 
  • US Weekly Initials jobless claims number  
  • NY Empire state and Philly FED manufacturing indexes 
  • US Crude oil inventories 
  • Speeches by UK MPC member Cunliffe, ECB President Lagarde and US Federal Open Market Committee (FOMC) members Kaplan and Quarles 


  • EU inflation report 
  • US Retail Sales for September and Industrial and Manufacturing production report 
  • Michigan Consumer sentiment survey