Good morning
US inflation a touch lower than expected, US dollar did weaken briefly but it didn’t last long and we are now back to pre-announcement levels, if anything perhaps USD is a touch stronger than before the release. This is hardly likely to push the Fed into action, we do have the FOMC meeting next week where a mention but perhaps not a full announcement of tapering could well be seen.
UK inflation however was stronger than expected, pushing higher to 3.2% in August, up from 2% in July. This is the highest level for nine years and Indeed it was the biggest one month move since way back in 1997. GBP did push a bit higher but reaction was limited given the BoE are looking for higher inflation levels into the year end, before dropping in 2022. GBPUSD had been below 1.3800 but is now 1.3830, while EURGBP is 0.8540 (GBPEUR 1.1710) having been 0.8560 (1.1680) in the early hours of the morning.
EURUSD is back at 1.1810 having only managed to reach 1.1850 or so on the US data yesterday. ECBs Schnabel said she is not expecting Eurozone inflation to be persistently high. I am a little surprised EUR isn’t weaker actually.
China have warned that Evergrande will not make its interest payments that are due this month which suggests a major debt restructure could be underway. In China as a whole, economic data looks worryingly soft, retail sales and industrial production the latest to disappoint overnight, which is unlikely to help countries that export to China. Lower AUD perhaps? Reports suggest Biden asked Xi for a face to face meeting during their recent phone call, Xi turned that opportunity down.
So I’m wondering about lower EUR and lower AUD. I’ll see if I can come up with something cheap, low risk and sensible to reflect this. Watch this space. Not sure I’ll have AUD in time for tonigghts inflation and unemployment data though.
UK PM Johnson warned of a possible major Covid outbreak over the next few weeks which could require ‘intervention’. So far we are not talking lockdowns, but a mandatory work from home and a return to mask-wearing. Not sure where that leaves pubs and restaurants, but not much we can do about that until the time comes. Boosters and vaccinations for 12-15 year olds also on the cards.
Apple did release a new version of the iPhone, I actually watched some of the rather well named ‘California Streaming’ event online. While the updated phone, with a new processor and camera, is certainly great, it really only served to remind me that I, probably along with the majority of people, only ever call upon a tiny fraction of its technological capability. I don’t even think I’m old fashioned, i just haven’t quite got my head around the idea that a phone is a computer as well. We all use our phones for internet, streaming TV, emails, music but there is so much more they can do, however with a relatively small screen there is surely a limit to what you’d really want to do with it. Now, those folding screens look pretty decent, I’ve not seen one in the flesh yet, but maybe they are the answer. Certainly until projected holograms become the norm.
- 10.00 EU industrial production
- 13.30 US NY empire state manufacturing
- 13.30 ECBs Schnabel speaks
- 13.30 CAD CPI
- 14.15 US industrial production
- 16.00 ECBs Lane speaks
- 23.45 NZ GDP
- 00.50 Japan trade balance
- 02.00 AUS consumer inflation expectations
- 02.30 AUS unemployment
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