Sterling lifted by oil and Moscow
Cable hit the 1.8330 level following hawkish comments from Chicago’s Fed Chairman, Moscow, indicating that the appropriate monetary policy was needed to keep inflation well contained and core as inflation remains at the upper end of range of price stability.
Moscow admitted the difficulty of saying how the overall economy will be affected by Hurricane Katrina but said the Fed will have to face a “number of judgment calls” in assessing the impact.
The next Fed meeting will be help on September 20th where the market is now pricing in a 68% chance that rates will be raised.
Cable, was also helped by oil coming off the boil. October crude futures dropped on the back of offshore production recovery in the Gulf of Mexico.
The Beige book was released last night, the release gives a subjective view of the economy, based on comments gathered from business people, market experts and such. The survey (compiled before Katrina) reported increased retail sales, rising manufacturing and modest wage increases, however, there were also signs of consumer fatigue in some areas and a softening in residential real estate in some areas.
Technical trading and continue prospects for further Fed tightening have weighed on the euro, giving it its first 3-day loss in 3 weeks.
Elsewhere, the US government downgraded its estimate of Q2 productivity growth to 1.8% annually from 2.2%, which was also lower than the 3.2% in Q1. Unit labour costs was revised upward but some of that reflects the downward revision that took place to Q1.
Wage and salary numbers reported last week from the Commerce Department showed some significant revisions so to a certain extent this was anticipated.
As oil prices ease and the extent of the Katrina crisis seems to be turning the corner it is less likely the Fed will move away from their underlying intent to raise rates.
Today the Bank of England holds its meeting and is widely expected to keep rates unchanged at 4.5%. The MPC voted 5-4 in favour of cutting rates in August, with the Governor for the first time in the minority. The inflation, GDP and consumer data over the past month together with the fact the MPC minutes pointed to a desire to “fine tune” rather than launch a sequence of rate cuts, all point to a verdict of “unchanged”.
Figures out of the US today include the weekly Jobless claims figure, the market expects a reasonable figure ahead of volatility in the upcoming weeks where the reading will be distorted by the impacts of Hurricane Katrina.
Post London trading we see the Consumer Credit figure. Consumer spending in the US is certainly losing steam however an increase of +$6bn is forecast as a surge in auto sales in July takes effect.
Moscow admitted the difficulty of saying how the overall economy will be affected by Hurricane Katrina but said the Fed will have to face a “number of judgment calls” in assessing the impact.
The next Fed meeting will be help on September 20th where the market is now pricing in a 68% chance that rates will be raised.
Cable, was also helped by oil coming off the boil. October crude futures dropped on the back of offshore production recovery in the Gulf of Mexico.
The Beige book was released last night, the release gives a subjective view of the economy, based on comments gathered from business people, market experts and such. The survey (compiled before Katrina) reported increased retail sales, rising manufacturing and modest wage increases, however, there were also signs of consumer fatigue in some areas and a softening in residential real estate in some areas.
Technical trading and continue prospects for further Fed tightening have weighed on the euro, giving it its first 3-day loss in 3 weeks.
Elsewhere, the US government downgraded its estimate of Q2 productivity growth to 1.8% annually from 2.2%, which was also lower than the 3.2% in Q1. Unit labour costs was revised upward but some of that reflects the downward revision that took place to Q1.
Wage and salary numbers reported last week from the Commerce Department showed some significant revisions so to a certain extent this was anticipated.
As oil prices ease and the extent of the Katrina crisis seems to be turning the corner it is less likely the Fed will move away from their underlying intent to raise rates.
Today the Bank of England holds its meeting and is widely expected to keep rates unchanged at 4.5%. The MPC voted 5-4 in favour of cutting rates in August, with the Governor for the first time in the minority. The inflation, GDP and consumer data over the past month together with the fact the MPC minutes pointed to a desire to “fine tune” rather than launch a sequence of rate cuts, all point to a verdict of “unchanged”.
Figures out of the US today include the weekly Jobless claims figure, the market expects a reasonable figure ahead of volatility in the upcoming weeks where the reading will be distorted by the impacts of Hurricane Katrina.
Post London trading we see the Consumer Credit figure. Consumer spending in the US is certainly losing steam however an increase of +$6bn is forecast as a surge in auto sales in July takes effect.
posted by Wise Money @ 9:29 AM
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