EM market report euro cash notes

ECB’s success will be judged on preventing fragmentation

Michael Rimmer
Michael Rimmer 21 June 2022

GBP: CPI in focus tomorrow

EUR: Lagarde states fragmentation must be prevented

USD: Juneteenth means a quiet day in the US

Sterling

It was a quieter day for sterling yesterday with no data of note released. PM Johnson politically remains under pressure as reports suggest he offered Carrie Johnson a key role whilst he was foreign secretary. Once again today we have no data of note, with MPC Member Tenreyro speaking being the only event of note. Sterling recovered lost ground against the euro and dollar yesterday, as risk on sentiment grew in the market.

CPI is released from the UK tomorrow, with it expected to creep up beyond 9%.

Euro

Like sterling, the euro was data light yesterday. Christine Lagarde testified to the European Parliament, where her remarks marginally strengthened the euro. In her testimony, she crucially did not reveal the features of the new bond-buying tool. She also mentioned how a recession would not be their baseline scenario, and also stated that “the fight against fragmentation is a precondition to the success of the monetary policy”, noting that they must prevent fragmentation. Watch us explain fragmentation here.

The latest current account figures are out from the EU at 9am, however this will realistically have little impact on the single currency.

USD

With it being Juneteenth day no data was released from the US yesterday. As result, the US dollar moved as a by-product of external factors. Today there is nothing of note out from the US, however, the US will re-enter the spotlight tomorrow with Powell testifying to the Senate Banking Committee, and then testifying to the House Financial Services Committee on Thursday.

Market rates

Today's Interbank Rates at 09:07am against sterling movement vs yesterday.

Euro

€1.164 ↑

US dollar

$1.229 ↑

Australian dollar

$1.761 ↑

South African rand

R19.60 ↓

Japanese yen

¥166.2 ↑

Have a great day.