The focus falls on sterling today with the UK Chancellor delivering his ‘autumn’ statement. This is essentially a mini-budget, even more so with an election only six months away. But there will be no pre-election give-aways, at least not the sort that involve making a large number of tax-payers better off. Whilst the economy has performed well in the past couple of years, the public finances have not improved at the same pace.
Borrowing this year has been running higher than last year, meaning that the Chancellor will have to substantially revise up borrowing projections for this year and for coming years as well. For the currency, if anything it will signal further softness ahead as it will limit the scope for the Bank of England to raise rates anytime soon as fiscal policy remains comparatively tight.
Elsewhere, the main overnight focus has been with the move to new lows for the year on the Aussie. GDP data fell short of expectations, the economy expanding just 0.3% QoQ (vs. expectations for 0.7%), with weakness in investment spending one of the main contributory factors. AUDUSD briefly touched below the 0.84 level, with AUDNZD holding steadier around the 1.08 level.
Elsewhere, USDJPY continues what seems its inevitable push towards the 120 level. On the data front, services PMI is seen at 09:30 GMT in the UK, with final reading for the same seen in the Eurozone. ADP employment data in the US at 13:15 GMT naturally a focus ahead of Friday’s employment report.