US Dollar strengthens following positive US data

Friday's data focused on the USand was largely positive, enabling the US Dollar to reclaim some lost ground against the Euro and Sterling.

US retail sales rose 0.6% in September, beating forecasts of 0.4% while the August gain was revised up to 0.7%. This had a knock-on effect for US CPI which also rose in September, up 0.1% with increases in energy and food costs the main contributors.

The New York Federal Reserve's Empire manufacturing PMI rose to 15.7 in October and surprised positively versus the consensus forecast of 6.5 as new orders posted their highest readings since June. The only slight downer was from the University of Michigan consumer confidence index as it fell to 67.9 in October from 68.2 in September.

There is plenty to keep the markets occupied this week with a series of US corporate earnings, the UK government's spending review and economic figures on the US housing market and Eurozone business activity.

In the UK, Chancellor Osborne will present the government's Spending Review to Parliament on Wednesday, laying out public spending plans for the fiscal years 2011 to 2015. He will detail how the Government aims to reduce spending by £83 billion in four years.

Ahead of the spending review on Tuesday, the UK Office of National Statistics will release the latest figures on the public finances in September, and the Bank of England will release the minutes from the MPC meeting on 7th October. Investors will be focused on the MPC vote outcome after comments from MPC member Posen gave rise to speculation about a 3-way split vote on the immediate need for more quantitative easing.