British Pound Stays Firm, Awaiting Philip Hammond’s Budget Speech

Market Reviews

The British pound remains relatively steady, as UK Chancellor of the Exchequer Philip Hammond will deliver his budget speech today. Australian dollar and New Zealand dollar are trading as the strongest. Meanwhile, Swiss franc, euro and Japanese yen are the weakest. Still, market reaction to S&P’s rating review on Italy was rather muted.

On stock markets, Nikkei gained 0.53%, Singapore Strait Times increased 0.56%. But Hong Kong HSI and China Shanghai SSE lost 0.07% and 1.47% respectively.

Standard & Poor's (S&P) rating agency maintained Italy’s sovereign debt rating unchanged at BBB but, outlook was lowered to negative from stable. S&P also projected Italy 2019 budget deficit at 2.7% of GDP, higher than the government’s own forecast and pledge of 2.4%. The rating agency noted that the government’s forecasts for economic growth of 1.5% in 2019 and 1.6% in 2020 were “overly optimistic”. And it projected 1.1% growth for 2019 and 2020.

Japan retail sales rose by 2.1% annual in September, beat the median forecast for 1.6%. But the pace was slower than the 2.7% expansion in August. On a seasonally-adjusted basis, retail sales fell 0.2% in September from the previous month, following August's 0.9% increase.

Bank of England and the Bank of Japan will hold their meetings this week. Both central banks are expected to keep monetary policies unchanged. Today, the US will release personal income, spending and PCE inflation. US non-farm payrolls will be published on Friday. Germany will publish CPI and unemployment and Eurozone release GDP on Tuesday. German retail sales and Eurozone CPI, unemployment rate will be released on Wednesday.