Category Archives: FX News

Yesterday, market mood-maintained risk-off as tensions in the Middle East escalated. The dollar’s appeal as a safe haven increased when Iran launched a ballistic missile attack on Israel, and the US threatened with severe repercussions.

On the data front, the flash reading of Eurozone HICP inflation fell to 1.8% in September, as expected. Core-HICP edged down to 2.7% from 2.8%. However, service inflation remained elevated, at 4% for the month.

Meanwhile, the US manufacturing ISM remained constant at 47.2 in September. However, the statistics had little effect on market sentiment yesterday.

Currency-wise, despite the risk-averse tone on markets, the dollar was firmly in the ascendancy. The dollar gained almost 0.6% against the euro and the pound. Elsewhere, the yen was higher, benefiting from safe-haven demand.

Looking ahead for the day, the macro data calendar appears to be pretty calm. The primary report will be the Eurozone unemployment rate for August. It is expected to remain at its all-time low of 6.4% throughout the month.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

Today brings a mix of Eurozone Purchasing Managers Index (PMI) data, to help assess the performance of the manufacturing sector. Attention will be on whether these figures show contraction or expansion.

Early this morning, figures in the UK revealed that business confidence plummeted in September, as business leaders nervously await details of Labours first budget. Optimism fell to its lowest level since 2022, with the index dropping to -38 in September, down from -12 in August.

Later this morning, Eurozone inflation will be closely monitored. In August, the change in the price of goods and services fell to 2.2 percent, and if today’s release moves closer to the Bank’s target of 2 percent, it may prompt the European Central Bank to consider reducing interest rates. A continued decline would suggest inflationary pressures have eased.

ECB’s Lagarde has recently voiced she expects that the Eurozone will remain tight until inflation drops – so if inflation falls today, it will raise the likelihood of an October rate cut.

Yesterday evening, the Fed Chairman ‘Jerome Powell’ spoke on the US economy. He signalled that the Federal Reserve are likely to reduce interest rates in smaller proportion rather than a jumbo 50 basis point rate cut, as seen in their last monetary policy decision.

Jermone Powell’s comments showed signs of support for the Dollar – pushing GBP/USD & EUR/USD to weekly lows.

The pound remains bullish and continues its recent good form into the week.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

Risk appetite was increased by overnight reports from China about the possibility of additional stimulus measures for the world’s second largest economy.

China’s central bank reduced interest rates and injected cash into the banking system today as Beijing launched a last-ditch stimulus campaign to return economic growth to this year’s objective of around 5%.

In the Eurozone, the ECB appears to be about to accelerate its rate-cutting program. Recent economic indicators, including as a gradually deteriorating PMI and expected negative growth in Germany, France, and Italy, suggest that the ECB’s bullish outlook on growth may be overstated.

ECB’s data dependent approach suggests that the central bank would stay flexible and change its policy stance in response to changing economic conditions.

It does not rule out a 50 basis point decrease in December 2024, or a faster rate of easing if economic data deteriorates severely.

Looking forward, today brings some significant survey data from the Eurozone, as the European Commission’s September economic confidence report is coming. The headline index is predicted to fall marginally, to 96.5 (from 96.6). However, considering the lower-than-expected PMI figures earlier in the week, there are negative risks to this estimate.

In the United States, the spotlight will be on the release of core-PCE (the Fed’s preferred inflation index) for August. Core inflation is expected to increase modestly to 2.7% from 2.6%.

For additional insights on how this could affect your business or to capitalise on market volatility, please speak to one of our experts.

With no UK economic data scheduled for today, market attention turns to key US policymakers’ speeches and the latest US statistics.

Already released this morning, German consumer confidence marginally improved, which was a surprise after previous economic data suggested Germany were heading towards a looming recession.

In the States, US Gross Domestic Product is set to increase to 2.9 percent (previous 1.4%), showing signs of economic growth. However, this surge is largely down to a reduce in inflationary pressures over the course of this year.

Fed Chairman Jerome Powell’s speech will be closely monitored to help clarify whether the aggressive cut was a pre-emptive measure to support future risks or a response to immediate economic concerns.

It was the Federal Reserve’s first rate cut since 2020, after the number of jobs added have slowed and the unemployment rate has moved up.

Pound Sterling has been supported by last week’s monetary policy decision, after they left rates unchanged following a pivotal 8-1 vote. The UK economy remains robust and is performing significantly better than the Eurozone and US – GBPEUR & GBPUSD have both been pushed and remain at a multi-year high.

For additional insights on how this could affect your business or to capitalise on market volatility, please speak to one of our experts.

The pound continued its upwards trajectory yesterday and briefly touched multi-year highs against both the US Dollar and the euro.

This was partly helped by comments yesterday from the Bank of England governor ‘Andrew Bailey’, that UK interest rates will come down, but that progress in this direction will be slow.

Last week, the Bank of England left its interest rates unchanged at 5 percent, whilst the FED cuts its interest rate down by 50 basis points.

There are expectations that the pound can retain its upside momentum, as long as the UK remains in the slowlane when it comes to interest rate cuts.

In terms of data today, we have the French consumer confidence index, followed by the New Home Sales for the US.

Tomorrow, we have the US durable goods, employment and growth figures. All sets of Us data will be closely watched and will clearly affect the dollar should anything disappoint.

On Friday, markets will turn their attention to the US core PCE inflation figure, which is the Fed’s preferred inflation gauge.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.