Marketwatch EU & UK

Daily Insights
July 9, 2024

  • The euro continues to consolidate around 1.0820 after the French election results suggest a more mixed outcome with fewer tail risks associated with a far-right victory. The hung parliament suggests neither block is sufficiently large enough to build a minority government so a broad coalition formation will be needed and with that comes instability and uncertainty around economic policy.
  • Federal Reserve Chairman Jerome Powell delivers his semi-annual testimony today and tomorrow amid uncertainty as to when his FOMC colleagues are willing to start cutting interest rates. More than two years after the central bank began hiking rates to curb inflation, the committee continues to be data dependent and unwilling to loosen policy, Officials have opted to keep the Fed funds rate ‘higher for longer’ continuing to be concerned about the return of inflationary pressures. Last month, Fed officials pared back estimates of how many times they expect to lower borrowing costs this year, suggesting they will hold rates at the current two decade high, waiting for inflation to head to the 2% target.
  • The pound remains stable, with GBPUSD hovering above 1.28 towards the top of a range that has held for several months. Pressure on the greenback after last week’s US labor market report and maybe some nervous optimism of a new UK government has kept GBPUSD well supported over the past few days. The MPC’s Jonathan Heskel yesterday signalled that he will vote to keep interest rates unchanged at his final policy meeting next month, saying that he needs more evidence that underlying price pressures are receding before backing a cut despite “encouraging signs” on inflation. He was the first MPC member to speak after the end of the election related blackout period, with Chief Economist Huw Pill and fellow rate setter Catherine Mann scheduled to speak tomorrow.

Economic Calendar

:
AUD - Westpac Consumer Sentiment
:
AUD - NAB Business Confidence
:
JPY - Prelim Machine Tool Orders y/y
:
USD - NFIB Small Business Index
:
USD - FOMC Member Barr Speaks
:
USD - Fed Chair Powell Testifies
:
USD - Treasury Sec Yellen Speaks
:
USD - FOMC Member Bowman Speaks
:
NZD - Visitor Arrivals m/m
:
JPY - PPI y/y

Market Indicators

Currency Pairs
Pair High Low
eur/gbp 0.8457 0.84509
gbp/usd 1.28164 1.27985
gbp/aud 1.90224 1.89867
gbp/nzd 2.09307 2.08957
usd/jpy 161.13 160.764
eur/usd 1.08333 1.08191
gbp/jpy 206.3 205.986
eur/cnh 7.89611 7.8862
usd/cnh 7.29303 7.28369
Equities and Commodities
Nasdaq 100 20547.1
DOW 39446
S&P 500 5593.93
BRENT CRUDE 85.51
WTI 82.11
GOLD 2365.38

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

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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.