After last week’s UK CPI print surprised markets, all eyes will be on the flash print for the euro area. The euro area flash print for May CPI will be released on Thursday, expectations are for a drop in the headline figure. No ECB speakers or data of note today. EURUSD trades at 1.0730.
GBP
Bank holiday today but markets are still digesting the strong inflation prints with the rise in core rate to 6.8% causing the most concern. Interest rates soared as market priced in more aggressive BOE rate hikes with 2-year yields +55pbs on the week to 4.50%.
Higher yields didn’t help sterling though, which was about a cent lower against the dollar at c.$1.2350 and EURGBP was steady at 87p.
USD
The Biden administration and Republican leaders have agreed a deal ‘in principle’ that would raise the US debt ceiling, but it must still be passed in Congress. Market reaction to the news has been muted, though European equity markets are firmer at the open this morning. In FX, USD/JPY had the obvious reaction to trade higher to near 141 level before coming off. US memorial day today so we probably need to wait until tomorrow for the full market reaction but market will likely focus on further rate hikes from here which would keep USD relatively well bid.
Morning Comment 29/05/23
EURO
After last week’s UK CPI print surprised markets, all eyes will be on the flash print for the euro area. The euro area flash print for May CPI will be released on Thursday, expectations are for a drop in the headline figure. No ECB speakers or data of note today. EURUSD trades at 1.0730.
GBP
Bank holiday today but markets are still digesting the strong inflation prints with the rise in core rate to 6.8% causing the most concern. Interest rates soared as market priced in more aggressive BOE rate hikes with 2-year yields +55pbs on the week to 4.50%.
Higher yields didn’t help sterling though, which was about a cent lower against the dollar at c.$1.2350 and EURGBP was steady at 87p.
USD
The Biden administration and Republican leaders have agreed a deal ‘in principle’ that would raise the US debt ceiling, but it must still be passed in Congress. Market reaction to the news has been muted, though European equity markets are firmer at the open this morning. In FX, USD/JPY had the obvious reaction to trade higher to near 141 level before coming off. US memorial day today so we probably need to wait until tomorrow for the full market reaction but market will likely focus on further rate hikes from here which would keep USD relatively well bid.
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