Dollar gains dominated the European morning on Wednesday after Fed Dudley’s hawkish comments overnight and the Euro dipped to below 1.0550 against the US currency, although rising German yields eased net selling pressure to some extent.
German consumer process rose 0.6% in February with the annual inflation rate rising to 2.2% from 1.9% previously and this was the highest rate for over four years.
With German unemployment continuing to decline, there will be expectations of higher wage settlements which could also unsettle the Bundesbank and increase pressure for a tighter monetary policy.
Blinkers Today is the day that the ECB and Bank of England meet. Spreads in the spot, forward and options markets are all reflecting a degree of uncertainty and exhibiting volatility already. As we have mentioned, both central banks are widely expected to pursue a 50-basis point hike but the higher conviction call within these […]
Germany With the increasingly uncomfortable news for Germany that German inflation is running at almost a 50 year high at 8.8%, it is becoming clear that calls for a modest rise in Euro interest rates in September are not going to cut it for the more hawkish Northern European members of the ECB who […]
UK Retail Sales Up 2.3% in July breaking the previous 3 month down trend due to purchases of summer clothes, picnic equipment and electric fans to cool consumers down. The last category could usefully be directed towards inflation which now stands at 9.4%. GBP/USD 1.2110. Spain As some of our readers will […]