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• The euro steadied on Friday after falling to a one-week low against the U.S. dollar in the previous session on the European Central Bank leaving the door open for more monetary policy easing, but keeping interest rates unchanged.

The focus will shift next week to a U.S. Federal Reserve meeting ending Oct. 30 and a Bank of Japan meeting ending Oct. 31. The Fed is expected to cut interest rates for a third time this year, but money markets have largely priced in a 25 basis points cut already, according to Refinitiv data.

It should be a done deal,” said Richard Falkenhall, senior currency strategist at SEB.
Therefore, the central bank meetings next week are “not going to move markets very much,” Falkenhall said. “I don’t think it will have a major impact on euro/dollar,” he added.

The euro was last flat at $1.1109, though close to the one-week low of $1.1094 it reached on Thursday. The index which tracks the dollar against six major currencies was also flat at 97.66.

The CME FedWatch tool, which reflects trading in fed funds futures, shows market expectations are for a quarter point rate cut next Wednesday are high, at 93.5%.

• The British currency is likely to remain fragile ahead of a meeting later on Friday where European Union officials may decide how long they will extend Britain’s deadline to leave the EU beyond the current date of Oct. 31.
At this stage, an election looks unlikely because the main opposition Labour Party has withheld its support and other opposition parties have rejected the offer.

Sterling was last down 0.2% at $1.2835, having slipped below %1.28 to a one-week low of $1.2790 on Thursday. Against the euro, the pound fell 0.2% to 86.55 pence.

• Vice President Mike Pence on Thursday denied that the U.S. is seeking to “decouple” from China, despite “the many challenges we face in the U.S.-China relationship.”

U.S. Vice President Mike Pence on Thursday accused China of curtailing “rights and liberties” in Hong Kong and blasted U.S. company Nike and the National Basketball Association for falling in line with Beijing in a disagreement over free speech.

China on Friday said it is extremely indignant about a speech by U.S. Vice President Mike Pence that accused China of curtailing the “rights and liberties” of people Hong Kong and resolutely opposes his comments.

• President Donald Trump continued his blasts at the Fed on Thursday, tweeting that policymakers are “derelict” in their duties for not cutting rates more aggressively.

• The European Union will discuss on Friday the length of another delay to Brexit after Prime Minister Boris Johnson demanded an election to break the paralysis that has gripped British politics for over three years.

Just a week before Britain was due to exit the EU, Johnson admitted that he would not meet his “do or die” deadline to leave the EU on Oct. 31 and demanded at Dec. 12 election to end what he cast as the “nightmare” of the Brexit crisis.

• Britain’s governing Conservatives will ask parliament again and again to back an early general election if lawmakers fail to support a snap poll in a vote on Monday, finance minister Sajid Javid said on Friday.

• There was likely to have been a rebound in Japan’s factory output and a jump in retail sales in September, a Reuters poll showed, but the outlook remained clouded by weak external demand and the impact from a sales tax hike at the beginning of this month.
Industrial output was expected to have risen 0.4% in September from the previous month after falling 1.2% in August, the Reuters’ poll of 16 economists showed.

The poll showed retail sales likely rose 6.9% in September from a year earlier, boosted by some rush demand for home electric appliances and clothes ahead of the sales tax hike.

• Japanese Trade Minister Isshu Sugawara resigned on Friday, following accusations of election law violations just a month after taking up the key post charged with handling a trade dispute with neighboring South Korea.

Prime Minister Shinzo Abe said he had accepted Sugawara’s resignation and asked Hiroshi Kajiyama to take the helm at the Ministry of Economy, Trade and Industry.

Reports said he had given gifts to voters in his Tokyo constituency, such as expensive melons and crabs, and offered condolence money to the family of a supporter, in possible violations of campaign law.

• Oil prices pulled back on Friday, retracing some of the gains of a three rally on Friday, as downbeat economic growth forecasts revived concerns over the outlook for fuel demand.

Brent crude LCOc1 was down 18 cents, or 0.3%, at $61.49 by 0642 GMT. Having risen nearly 1% on Thursday, the global benchmark was still set for a weekly gain of more than 3%.

West Texas Intermediate (WTI) crude CLc1 was down 21 cents, or 0.4%, at $56.02. The U.S. benchmark rose 0.5% in the previous session and was on track for a gain of more than 4% over the week.

The strong weekly rise was underpinned by a surprise decline in U.S. inventories of crude and optimism about more efforts to support prices by OPEC and its allies.

Yet, concerns over weakening economic growth remained the fundamental driver for prices.

Reference: Reuters, CNBC, Investing.com