Marketwatch EU & UK

Daily Insights
September 13, 2024

  • The ECB lowered interest rates at its policy meeting yesterday in response to inflation falling towards the central bank’s 2% target and fears over the outlook for the economy. The key interest rate was cut by 25bp to 3.5% and follows the same sixed reduction in June and a pause in July. “Based on the Governing Council’s updated assessment of the
    inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it is now appropriate to take another step in moderating the degree of monetary policy restriction,” it said in a statement. The overall economy is struggling with manufacturers remaining in the doldrums and those concerns prompted the ECB to trim its forecast for 2024 gross domestic product — now seeing expansion of 0.8%
    compared with 0.9% in the last round of quarterly projections. The inflation outlook was broadly unchanged. ECB President Christine Lagarde and officials on the Governing Council reiterated that they can’t commit to a specific path for interest rates as the outlook remains “data dependent.” However, markets continue to price in at least one more cut in 2024 followed by further cuts in 2025.
  • The US dollar remains on the back foot, trending lower as investors continue to mull over recent data, searching for clues to calculate if the Fed will lower rates by 25bp or 50bp at the upcoming policy meeting. Yesterday’s PPI report did little to influence analysts as producer prices picked up only slightly in August after the previous month’s data was revised lower. Former Federal Reserve Bank of New York President William Dudley put the cat amongst the pigeons overnight saying, “I think there’s a strong case for 50,” adding, “I know what I’d be pushing for.”

Economic Calendar

:
JPY - Revised Industrial Production m/m
:
EUR - French Final CPI m/m
:
GBP - Consumer Inflation Expectations
:
EUR - Industrial Production m/m
:
EUR - ECOFIN Meetings
:
EUR - Eurogroup Meetings
:
CNY - New Loans
:
CNY - M2 Money Supply y/y
:
CAD - Capacity Utilization Rate
:
CAD - Wholesale Sales m/m
:
USD - Import Prices m/m
:
USD - Prelim UoM Consumer Sentiment
:
USD - Prelim UoM Inflation Expectations
:
EUR - ECB President Lagarde Speaks

Market Indicators

Currency Pairs
Pair High Low
eur/gbp 0.8437 0.84286
gbp/usd 0.76188 0.76038
gbp/aud 1.9564 1.95145
gbp/nzd 2.12752 2.12147
usd/jpy 141.84 140.644
eur/usd 0.90319 0.90167
gbp/jpy 186.159 184.943
eur/cnh 7.88773 7.8673
usd/cnh 7.11689 7.10116
Equities and Commodities
Nasdaq 100 19444.8
DOW 41131
S&P 500 5602.43
BRENT CRUDE 72.41
WTI 69.44
GOLD 2568.35

This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.

About Simon Walker

author-headshot

Simon Walker is head of the GPS Capital Markets trade desk in our London office where he is responsible for covering market risk in European hours. He has over 25 years’ experience in foreign exchange, working in both sales and trading.