Draghi, Inflation, UK Politics and Trump Keep the EUR, USD and GBP in Focus

Daily Update - 12th June 2019

Yesterday’s Focus

• GBP - Average Earnings Excluding Bonus & Including Bonus, ILO Unemployment Rate.
• USD - Producer Price Index Ex Food & Energy

Yesterday’s Explained

Sterling pulled away from five-month lows versus the euro on Tuesday after British wages in the three months to April rose faster than expected. The single currency was little affected by U.S. President Donald Trump’s accusation that Europe was devaluing the euro, which has gained roughly 1.4% against the dollar so far in June If the chances of a Fed rate cut remain on the table that creates a suppressive environment for the US Dollar, which in turn should allow for some breathing space for global currencies.

 

Today’s Market

• EUR - Producer Price Index Ex Food & Energy
• USD - Consumer Price Index.

Today’s Focus

Fed Chair Jerome Powell insisted that recent weakness in inflation has been transitory and the rise of Core CPI to 2.1% y/y in April vindicates his words.

Consumer prices account for most of the overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.