Sterling started the week in downbeat fashion, struggling to gain a foothold and losing nearly a cent against the euro over the course of the day. There was no data of any significance to impact sterling markets on Monday, which resulted in investors having little cause for optimism following a recent run of negativity. With nothing to support the currency, some insight was taken from words from Bank of England (BoE) Gov. Mark Carney. In an interview, he stated that the BoE’s policy could be influenced by weakening growth in the euro zone. This implication that targets in key areas could not be reached as soon as first thought brought the idea that rate hikes could be slower in materializing, harming the currency’s performance.

Tuesday brings some significant activity, with inflation figures coming first thing in the shape of the Consumer Price Index (CPI). This is a crucial area. As it is the key release of the day it will be the main talking point and provide opportunity for markets to react.

Euro has a good start

An unremarkable day for the euro on Monday saw it hold flat just below 1.27 against the US dollar, but make up some ground against a relatively weak sterling. The only data release was wholesale inflation data out of Germany, which was bang on forecast of 0.1 percent.

Tuesday promises to be more interesting, with monthly German economic sentiment figures released Tuesday morning. Last month’s figure was 6.9 (anything about 0 illustrates optimism), but with the German economy having shown some very worrying signs over the past month, we can expect today’s figure to be well below that. Monthly industrial production figures from the whole European bloc will also be watched closely this afternoon.

US dollar steady

A quiet day started the week for the dollar Monday, unsurprisingly given the fact that US markets were closed in observance of Columbus Day. This meant no activity and no data from stateside, giving investors elsewhere little to act on. As a result, the dollar fell against the majority of its major partners, but did gain ground against a weakening sterling.

The dollar will look to kick start its week and make up for lost time on Monday. However, there is still a lack of activity on the data front, and as such the dollar may still struggle to gain support. Investors will look further into the week with speculation likely over future releases, on an otherwise quiet start to the week.

Australian dollar vulnerable

The Aussie dollar remained just above four-year lows against the US dollar, but it remained on vulnerable ground due to the instability of the world economy. However, it strengthened across the board as better-than-expected Chinese trade data for imports and exports was released. This was much-needed news for China and certainly helped the world’s second largest economy in the short term. For the rest of the week there is very little out from Australia except for a report on business confidence today.

The Canadian dollar strengthened throughout the day against sterling although it remained fairly stagnant on the whole as it was a bank holiday in Canada on Monday. The dollar remains in a weaker position against most of its rival currencies due to global growth struggling, and failed to take advantage of Canada’s impressive employment figures – showing a net gain of just over 70,000 jobs – as the unemployment rate fell to 6.8 percent. For the rest of the week there is CPI data out on Thursday – this is expected to fall to 0.2 percent.

— Charles Purdy is director at Smart Currency Exchange.