Good morning,
Yesterday was a choppy day for Dollar pairs as Trump and Xi confirmed that a phone call took place and that they would (all being well) be meeting at the Japanese G20 summit. The Dollar remained net positive throughout the afternoon but it is still headline driven by the media and a breakdown in the relationship between the US and China will result in further fear.
Mario Draghi’s future hint of economic easing sent the Euro crashing lower as they reveal more fiscal and monetary policy changes are on the horizon. ECB officials are basing these action points off several “alarming” market signs, including the distant eurozone inflation targets which still look like a pipe-dream, alongside Brexit and trade-related pressures on economic growth for H2.
The FED will be under the microscope this evening as it could be their turn to take centre stage and reveal their dovish outlook for the next year and beyond for the US economy. Every piece of economic research and market news has focused their attention on this prospective 75 basis point which is a direct contradiction to the last 24 months of bullishness. Trade war uncertainty, manufacturing numbers close to a recession, failing to hit their inflation targets, alongside Donald Trump directly telling the world via Twitter that the Fed raising rates would be “madness” will all be challenged this evening.
UK inflation is due out at 09:30 where the consensus expects a further decline from 1.8% to 1.7%. GBPEUR is still desperately fighting the EURO for the ground at the 1.12 level and GBPUSD found some mild support at 1.2500. Politics is still a key driver for sentiment but there isn’t much to inspire markets at the moment.
Have a great day.