Germany’s economy contracts

14th August 2019 Market Update

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🇬🇧 GBP –  Average earnings came out in line with market expectations yesterday at 3.7%, which gave sterling some further support against both the euro and US dollar. This was an 11 year high in the year to June, and a key reason for this was due to the unusual timing for pay rises for public workers. This morning CPI is being released from the UK and is expected to slightly drop from 2.0% to 1.9%. Core CPI is expected to hold firm around the 1.8% levels.

🇪🇺 EUR – The German ZEW economic sentiment was a worse than forecast yesterday, with a reading of -44.1. This was compounded by Germany’s GDP, which showed that Germany’s output had fallen by 0.1% in the second quarter. It showed that there had been a slow down because exports had recorded a strong “quarter-by-quarter decrease than imports”. This has stoked further fears of the global economic slowdown.

🇺🇸 USD –  CPI and core CPI came out inline and slightly above expectations respectively at 0.3%. This however had minimal impact on the exchange rates, as it was roughly in line with market expectations. Although this showed a slight acceleration in inflation, the Federal Reserve are still widely expected to cut interest rates in September. This afternoon, there is no data of note from the US.



GBP: Sterling receives support as average earnings rise
EUR: Concerns around Germany will weigh on the eurozone
USD: Interest rate cut still expected despite uptick in inflation


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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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