Market themes of the Day: UK & Eurozone inflation and Powell’s testimony part 2.0 headline
|What you need to know before markets open
In Europe
- The European Union officials signed the biggest free trade agreement with Japan eliminating 99%of tariffs that cost businesses in the EU and Japan nearly €1 billion annually.
- The Eurozone inflation is expected to rise 2.0% y/y in June with core inflation increasing 1.0% y/y.
In the UK
- The Governor of the Bank of England did not provide any shocks by saying that a no-deal Brexit will have significant economic consequences. Another topic was cyber-security, not a market mover.
- UK Government wins the vote on trade bill amendment defeating the rebellion of pro-EU Conservative lawmakers in a tight vote of 307 to 301.
- The UK labor market report came out in line with expectations with wages rising 2.7% y/y excluding bonuses while the unemployment rate remained stuck to four decades low of 4.2%. For details read my Analysis here.
- The UK inflation is expected to pick up to 2.6% y/y in June while core inflation is expected to rise 2.2% y/y in June. For further details read my Preview here and learn how to trade the UK inflation data with GBP/USD here.
In the US
- The Federal Reserve chairman Jerome Powell praised the underlying strength of the US economy that justifies the monetary policy normalization, all in line with expectations. For details read Yohay’s Analysis here.
- Kansas City Federal Reserve Bank President Esther George said gradual monetary policy tightening is still needed.
- The US housing market data are set to confirm a rising appetite of Americans to build new houses in the US.
- The Federal Reserve’s chairman Jerome Powell testifies for the second day in the US Congress on Wednesday with the message out already in the first day of his testimony.
- The Federal Reserve’s Beige book of the regional economic activity is scheduled for Wednesday.
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