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FOREX: UK Budget in Focus, EUR Buoyed on Firm German Regional CPIs

FOREX
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  • The UK Budget takes focus ahead, at which the UK Chancellor Reeves outlines the first Labour budget in over 15 years - and is expected to show a series of tax rises and a change in fiscal rules. While GBP vols have ticked higher headed into the release, the vol premium is comfortably below that seen across 3 of the past 4 UK fiscal events - supporting the theory that while infrastructure spending is to rise in the coming parliament, there will be little to deter the Bank of England's current easing trajectory toward neutral.
  • GBP/USD trades back above the 1.3000 level, but gains at these levels are considered corrective as part of the bear leg off the September high. On the upside, initial firm resistance to watch is 1.3065, the 50-day EMA. A clear breach of this average is required to signal any reversal.
  • EUR trades well, gaining against most others as regional German CPI prints point to upside risks for the national reading - with the three largest states all seeing monthly inflation top 0.2% - Baden-Wuettemberg was a particularly high reading at 0.7% M/M. The national print follows later today at 1300GMT.
  • US data today includes the advance reading for Q3 GDP, with ADP employment change and pending home sales also on the docket. The Fed remain inside the pre-decision media blackout, leaving speaker focus on ECB's Schnabel, Villeroy and Nagel, with BoC's Macklem and Rogers to make a second appearance of the week.
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  • The UK Budget takes focus ahead, at which the UK Chancellor Reeves outlines the first Labour budget in over 15 years - and is expected to show a series of tax rises and a change in fiscal rules. While GBP vols have ticked higher headed into the release, the vol premium is comfortably below that seen across 3 of the past 4 UK fiscal events - supporting the theory that while infrastructure spending is to rise in the coming parliament, there will be little to deter the Bank of England's current easing trajectory toward neutral.
  • GBP/USD trades back above the 1.3000 level, but gains at these levels are considered corrective as part of the bear leg off the September high. On the upside, initial firm resistance to watch is 1.3065, the 50-day EMA. A clear breach of this average is required to signal any reversal.
  • EUR trades well, gaining against most others as regional German CPI prints point to upside risks for the national reading - with the three largest states all seeing monthly inflation top 0.2% - Baden-Wuettemberg was a particularly high reading at 0.7% M/M. The national print follows later today at 1300GMT.
  • US data today includes the advance reading for Q3 GDP, with ADP employment change and pending home sales also on the docket. The Fed remain inside the pre-decision media blackout, leaving speaker focus on ECB's Schnabel, Villeroy and Nagel, with BoC's Macklem and Rogers to make a second appearance of the week.