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ECB deny inflation, rate rise story

Good morning

Very little in the way of significant market movement, indeed the week as a whole has been rather muted. US dollar is perhaps a touch higher than at the start of the week against a backdrop of generally lower risk sentiment. This has not been helped by the issues with Evergrande and the ongoing concerns of a China slowdown, plus the general geopolitical tensions with North Korea test-firing missiles and US, UK and those fellows down under agreeing a new security pact.

UK retail sales disappointed this morning, slipping back in August 0.9% against what was hoped would be a small rise. We do have inflation expectations this morning which gives an idea of what BoE expect over the next twelve months. GBPUSD at 1.3800 having recovered from its 1.3765 lows yesterday, while EURGBP traded down to almost 0.8500 (GBPEUR 1.1765) yesterday but wouldn’t hold there and is now back up at 0.8535 (1.1715), pretty much in the middle of the weeks fairly tight range.

An FT article late yesterday suggested ECB are looking for inflation to hit 2% target by 2025 and as such we could see a rate rise from ECB in about two years, much earlier than most expectations. ECB are making it clear this inflation thinking is inaccurate and did not come from them. However ECBs Lane did discuss longer term inflation in a private call with German economists earlier this week, which could perhaps go some way to explain the article. EURUSD traded down to 1.1750 yesterday, the article did seem to take it off those lows, although we are now 1.1775 so it hasn’t provided much support.

Norges bank next week likely to raise rates, which would make them the first G10 central bank to do so. It is pretty much priced in, but a lot will depend on forward guidance, whether further rises are on the agenda. Chance of NOK upside although I’d imagine they will be careful to not let NOK run too strong. EURNOK now 10.15, USDNOK 8.62.

An incredible performance by Spurs against the mighty Rennes saw them come away with a 2-2 draw. They really need to up their game, otherwise I’m expecting a phone call from them in an attempt to lure me away from my current coaching role. Until then, I’ll stick with the U15s, we are away this weekend to a team we generally do well against although I have dome this long enough to know there is no such thing as a certainty. I’ll report back Monday. In the meantime have a great weekend.

- 09.00 EU current account

- 09.30 UK consumer inflation expectations

- 10.00 EU CPI

- 15.00 US michigan sentiment survey

- 20.30 CFTC positons

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