Talking Points:

British Pound May Be More Responsive to Upbeat vs. Soft 3Q UK GDP Print
Yen Rose, Commodity Dollars Declined Amid Risk Aversion in Asian Trade
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Third-quarter UK GDP figures headline the economic calendar in European trading hours. The year-on-year growth rate is expected to register at 2.4 percent, matching the two-year low recorded in the three months through June.

Traders will look to the outcome to guide Bank of England monetary policy expectations. As it stands, market expectations are already leading dovish. Futures pricing suggests investors do not expect tightening until the third quarter of 2016. That suggests the British Pound may be more sensitive to an upside surprise versus a disappointing one.

The safety-linked Japanese Yen outperformed while the risk-geared Australian, Canadian and New Zealand Dollars declined as sentiment soured in overnight trade. The MSCI Asia Pacific regional benchmark stock index declined in a move that seemed corrective after prices hit a two-month high yesterday.

Knock-on weakness from Wall Street – which saw a similar pullback from levels unseen since August – may have also played a role. The proximity of high-profile event risk headlined by the FOMC policy announcement has probably encouraged the retracement.

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