europe union building

Draghi calls EU states to action

13th September 2019 Market Update

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🇬🇧 GBP –  There was no data of note from the UK yesterday, and there is no data of note being released today. Details of the judgement which ruled the suspension of Parliament unlawful were revealed, with the judges feeling that the move was sought in a clandestine manner. There are also accusations being thrown around that Boris Johnson has lied to the Queen, as the controversial nature of the prorogation of parliament appears to have rattled politics in the UK.

🇪🇺 EUR – In his penultimate rate-setting meeting, Mario Draghi cut the deposit rate as expected from -0.4% to -0.5%. Draghi also restarted a bond-buying programme of €20bn a month, starting from November. He took these measures as both growth and inflation appear to be sliding off. There is only so much the ECB can do with the tools at their disposal, and Draghi stated that “fiscal policy should become the main instrument” to boost inflation and growth. Despite initially weakening, the euro strengthened and regained its lost ground. Today Eurogroup meetings are taking place, however they are unlikely to have any impact on the euro.

🇺🇸 USD –  Yesterday CPI was released inline with expectations from the US at 0.1%, and core CPI exceeded general market expectations, matching the previous reading at 0.3%. Following the ECB’s decision to cut the deposit rate, Trump placed renewed pressure on the Fed to cut interest rates to stimulate the US economy. This afternoon retail sales and core retail sales are being released and are expected to drop off from the previous reading.

 

Summary:

GBP: Johnson’s prorogation under renewed scrutiny
EUR: Draghi calls EU states to action to stimulate economy
USD: Trump looks on enviously as the ECB cut their deposit exchange rate


 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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