Good morning,
Yesterday saw the release of US import price data at 13:30, showing that import prices had dropped by 0.3% last month. This coupled with the slight rise in CPI on Tuesday, could potentially lead to the Federal Reserve delaying the tapering of its bond buying scheme as the worry inflation will continue to rise starts to subside. EUR/USD briefly dipped below 1.1800 before regaining the mark and closing just above. GBP/EUR has continues it’s run in the 1.1700 region and GBP/USD closed the day off at 1.3835.
Throughout the Asian trading session this morning, EUR/USD has again dropped below 1.1800, currently sitting at 1.1790 at time of writing. As global sentiment sours, the USD has strengthened. With uncertainty in the market, global traders head towards the USD as a safe-haven. In the UK, Andrew Bailey, the Bank of England Governor had confirmed the minimum requirements for an interest rate hike had been met with three other committee members agreeing. The BoE is now expected to increase interest rates in 2022, while analysts had previously estimated a hike in Q4 of 2023.
Today will see retail sales data released in America at 13:30. ECB president Christine Lagarde is set to speak at 13:00, following on from last weeks confirmation that the quantitative easing programme would be scaled back in the EU due to the recovering economy. The political uncertainty in Germany could also weigh on the EUR, opinion polls are showing it’s likely we will see a fragmented parliament, which may well benefit the dollar as we head towards election day on the 26th.
Have a great day.
Thomas Read, Senior Relationship Manager.
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References
https://www.fxstreet.com/currencies/eurusd
https://www.poundsterlinglive.com/eur/15948-pound-to-euro-2021-highs-possible-natwest-argentex