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The week ahead 29.10.2018

29/10/2018

An interesting financial week ahead starts with the UK Autumn budget (1530 GMT), the final one before Brexit - or is it ? Sure, on paper it appears so, but with UK Prime Minister Theresa May seemingly determined to make the worst of both worlds by disregarding the referendum outcome and tying the UK into a potentially endless 'transition period' it may well be that the UK is still in thrall to the EU for years to come.  With the UK Chancellor Hammond fully committed and actively working to keep the UK within the EU, and attracting a good deal of criticism from those who see this as incompatible with the manifesto promises on which his Party was (just about) elected, we do not expect this Budget to have anything in the way of added controversy. Indeed, it is likely to err on the side of generosity as he tries to buy off further criticism of the Government’s handling of the Brexit negotiations which have so damaged the democratic process in the UK.

On Tuesday/Wednesday it’s the turn of the Bank of Japan to take centre stage, with their monetary policy meeting and outlook for the economy and prices. Their statement will be studied for any slight change of nuance in the language used, but when you have to utilise that level of forensic investigation this will be a project only for economists. Foreign exchange dealers already know that the impact of any such interpretive analysis is little more than clutching at straws when it comes to direction, which will be determined by the usual rules of Supply and Demand.

Thursday brings the Bank of England MPC meeting but anything other than ‘business as usual’ would be something of a surprise. If Governor Carney has anything to say it will doubtless be his usual carefully-worded but evidently disapproving comments regarding Brexit – exactly what you’d expect for someone whose ties to Goldman Sachs run so deep.

Finally, Friday brings the monthly US Non Farm Payroll data which will provide the usual mixture of excitement and frustration, with expectations around the +175k figure. Any revisions to last months disappointing number will be looked for with keen interest.

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