Current Market Overview

  • Mixed Eurozone data

  • UK wage growth rise expected

 

Current Market Overview

Yesterday was light on data but we heard from the Reserve Bank of Australia (RBA) overnight.  Whilst the RBA is open to unconventional actions like negative interest rates if necessary to reflate the economy, they see that as only necessary in exceptional circumstances. The Aussie Dollar didn’t significantly react to that news.

 

Mixed messages for Eurozone

We’ve had mixed messages from the Eurozone in the last 24 hours. German inflation hit a three month high, supposedly driven by the weakened Euro and higher import prices, but Spanish inflation moved in the other direction. Interestingly, Irish consumer sentiment hit a 56 month low in July and that chimes with Boris Johnson’s assertion that the EU will capitulate at some stage to save the Irish economy.

 

UK employment figures due today – be ready for Sterling movement

The next data due (at the time of writing) is the UK earnings and employment report. We suspect the unemployment rate will stay at around 3.8%; a remarkably low level but we may see a further rise in average earnings; strengthening spending power and assisting the economy. Can someone tell the Pound, please, because it seems incapable of retaining any strength while the 31st October ticks inexorably nearer. Some Sterling strength may well come from today’s data, so be ready.

 

US Dollar still strong – data should be stronger too

This afternoon’s US data includes inflation data which ought to be a tad stronger at 1.7% or so and earnings data too. We will also see the release of the Redbook, which the Federal Reserve will review at their next meeting. It is usually insightful and may be more so while rate cuts are being pondered by the Open Market Committee. The US Dollar remains buoyed by safe haven buying.

The other currency benefitting from safe haven buying is the Japanese Yen, which is pushing its strongest levels in seven months.

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