GBP: Growth stalls
EUR: ECB slow PEPP
USD: Record PPI
Sterling traded in a tight range last week mainly trading off negative euro flows. Disappointing GDP data added to a recent run of weak economic data indicating the rate of growth has slowed rapidly and may well have peaked back in June/July. With the extraordinary government stimulus measures due to end this month the real test for the economy lies ahead.
Ahead of next week’s BOE rate decision the key data points this week for sterling will be tomorrow’s employment data, the inflation report due Wednesday and retail sales on Friday.
Last week’s trading in the single currency was mainly dominated by the latest ECB meeting. The central bank announced a slowing of the PEPP programme (Pandemic Emergency Purchase Programme) and released their latest forecasts for growth and inflation, both of which underwhelmed the markets with inflation forecast to still be well below target for the next 2 years.
In the subsequent press conference ECB President Lagarde said we are moving in the right direction, but we are definitely not there yet – citing the 2m+ more unemployed than pre-pandemic
Key data point this week for the euro will be the inflation report due Friday.
The dollar regained its poise last week following the highest ever reading for producer price inflation. Input prices surged once more as rising raw material costs and continued supply bottlenecks continue to wreak havoc on manufacturers. The key question moving forward is will these higher costs get passed onto the consumer, placing even more importance on Tuesday’s inflation report and Thursday’s retail sales figures ahead of next week’s FOMC meeting.
China’s aggressive regulatory crackdown on internet companies last week saw Asian equites markets hit hard and added to the general risk-off sentiment.
As a result, we saw heavy selling in the so-called risk on currencies such as AUD and NZD.
Today’s Interbank Rates at 08:56 against sterling. Movement vs Friday.
|US dollar||$1.381 ↑|
|Australian dollar||$1.877 ↑|
|South African rand||R19.56 ↑|
|Japanese yen||¥152.1 ↑|
Have a great day.