Markets mostly flat - Carney set to deliver quarterly inflation report

Claire Hogarth24/Jun/2014Currency Updates

GBP

London closed with sterling ticking up against the euro and dipping slightly against the dollar. With no data released other than the Bank of England’s credit conditions report, sterling was mostly flat and bounced around resistance levels with no notable pivots.

The FTSE flipped its losses last week closing strongly; however it slipped a little yesterday with the story much the same across Europe’s bourses.

Big day for the BoE and Carney today. The Governor will likely face a grilling from MP’s as he gives evidence to the treasury select committee on the quarterly inflation report and doubtless how he intends to deliver the final leg of Forward guidance and ease the market gently back to normality. Although opinion’s naturally clash, the City mostly credits Carney with the tricky juggling act he has displayed to handle the pressing issues of rapidly dropping unemployment, flat wage rises and inflation running below target. If last week’s events are anything to go by Carney’s lyrics today could bring some market movements.

Carney set to talk at 9.30, also mortgage approvals set for release and expected to the downside.

EUR

London closed with the euro dipping against both sterling and dollar; however it has found support this morning and pushed back a little. Yesterday’s Eurozone PMI figure show the Eurozone is still swinging but right now it seems punch drunk with most jabs failing to land.

The ECB’s decision to move IR into negative territory is looking increasingly justified. Yesterday saw a mostly dismal performance from private sector firms with last month’s activity slowing to the slowest pace since December. Markit’s snapshot of activity showed Germany is holding up but slowing, however France remains a real concern with declining momentum for the second month on the bounce. This further highlights the disparity between the 2 leading economic powerhouses of the Eurozone.

Ultimately these figures put the Eurozone likely to weigh in with 0.4% growth in the latest quarter.

German IFO figures set for release this morning, also Italian wage inflation and Portuguese current account balance.

USD

London closed with the dollar gaining on sterling and the euro.

Stronger than called May US existing home sales generally added to a more appealing longer term outlook for the dollar although some in the market will be waiting for wider data to paint a more clear picture which would feed into the tightening bias for US monetary policy. For the meantime it’s likely the dollar mostly stays range bound. Given what the Fed has recently told the market, the market is keen to see more transparency on the state of the US economy prior to seeing widespread dollar buying.

Data of note today includes – Redbook index, consumer confidence and new home sales.

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Written by Claire Hogarth

Marketing Executive at Ebury. English Literature graduate from the University of York and a motivated professional.