Market Review – Fundamental Perspective 29 September 2017

Risk sentiment traded with a mixed tone yesterday, with global equities failing to excite. The USD continued its recent rebound in the London morning before falling back in the afternoon whilst the overnight session in FX was relatively subdued.
Inflation figures in Germany and Spain for September printed in line with expectations yesterday whilst US Q2 GDP was revised up from 3.0% y/y to 3.1% y/y.
In the UK, EU’s head Brexit negotiator Barnier acknowledged the more conciliatory tone from the UK but concrete details are still lacking. Short term GBP price action was largely driven by month/quarter end flows and gyrations in USD.
This morning, focus will be on the final release of Q2 GDP and Barclays Research expects growth “…to be confirmed at 0.3% q/q with limited FX impact…”.
Christine Lagarde and Mark Carney will cap of a long week of central bank speeches as they take part in the celebration of the BoE’s 20th year of independence from HM Treasury.
Central bankers’ speeches this week have had little impact on markets with the exception of Fed Chair Yellen’s after which the market’s expectation for a December rate hike rose.
The central bank of Mexico kept policy on hold yesterday as expected. The board sees the possible effects of the recent earthquake and hurricanes on inflation and economic activity as moderate and temporary, thus medium-term expectations should not be affected

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