03/10/2024
Written by: Ian Morley
Summary:
Increasing market expectations of a rate cut on Thursday led to early GBP losses yesterday, which stabilised by the afternoon, resulting in GBP trading nearly flat by day’s end. USD gains from last week persisted, with both GBP/USD and EUR/USD reaching new three-week lows, as Treasury yields remained steady in anticipation of the Fed meeting and upcoming job data this week. The EUR was broadly weaker ahead of Thursday’s CPI release, and month-end flows were unimpressive, even though core PCE figures in the US were slightly higher than expected.
Speeches:
Market Insight:
Eurozone GDP figures are due this morning, with only slight variations anticipated from the first quarter. Thursday’s CPI data is expected to have a more significant impact on the EUR. If inflation appears to be declining more rapidly, markets might anticipate three additional rate cuts instead of the two increases currently expected, which would negatively affect the EUR. French GDP, released this morning, has exceeded expectations.
In the afternoon, the US will release two sets of data. JOLTs job openings are forecasted to decrease to 8,000,000 in June after a spike in May, and consumer confidence is also expected to decline. Both reports should support the view that the Fed may cut interest rates in September. If this happens, the USD is likely to relinquish some of yesterday’s gains.