British Inflation Unexpectedly Falls

Freshly out of the oven this morning, the British inflation unexpectedly eased from 6.8% to 6.7% in August, core inflation fell from 6.9% to 6.2%. The surprise fall in UK inflation triggered a kneejerk selloff in sterling, as today’s data cements the expectation that the Bank of England’s (BoE) next rate hike could also be its last.

Fresh Fed Signals May Jolt Markets

The FOMC is widely forecasted to leave its benchmark rates unchanged today. Fed Chair Powell is also expected to convey a hawkish hold, though such commentary unlikely to bring the US rates debate to a conclusive end.

Bitcoin Shy to Rise Before the Fed

The crypto market has been trading around 1.08 trillion over the last day. The trading range is narrowing as the Fed decision approaches. However, it is worth highlighting the pressure on the markets early on Wednesday and the intensification of cryptocurrency selling as the cap rises towards 1.09 trillion.

BoE Decision on Thursday a Coin Toss After Surprisingly Encouraging Inflation Report

Everyone at the Bank of England undoubtedly breathed a collective sigh of relief this morning, joining the rest of us, as inflation subsided much more than expected in August.

Aussie Jumps as PBOC Holds Lending Rates, Hits 3-week High

The Australian dollar has posted strong gains on Wednesday. In the European session, AUD/USD is trading at 0.6491, up 0.58% and its highest level in three weeks.

Sunset Market Commentary

UK August inflation numbers this morning fell short of analyst expectations. The headline figure only rose by 0.3% m/m, unexpectedly lowering the yearly reading from 6.8% to 6.7%. Core inflation (ex. food and energy) eased from 6.9% to 6.2% compared to the 6.8% consensus.

UK Inflation Slowdown Unlikely to Stop Rate Hike

UK consumer inflation slowed from 6.8% to 6.7% y/y, contrary to the expected acceleration to 7.0%. Core inflation, excluding food and energy, saw an even more significant slowdown of 6.2% from 6.9% y/y, well below the average forecast of 6.8%.

Could BoJ Upset Expectations for a Dull Meeting?

The basis for any BoJ move is the economic outlook. The strongly positive GDP figures for the second quarter of 2023 have been followed by mixed data. Similar to other countries, the housing sector remains under pressure with the July housing starts dropping very close to an 8-year low, and labour cash earnings showed a considerable slowdown in July. On the flip side, the PMI surveys remain optimistic, especially when compared to the euro area figures.

Will Eurozone PMIs Validate ECB Cut Bets?

Last week, the ECB decided to raise interest rates by 25bps, taking the deposit facility rate to a record high of 4%. However, with the latest data pointing to a severely wounded economy, officials cut their economic growth forecasts, and despite raising those for inflation, they hinted that this could be the last rate increase in this tightening cycle.

Fed React: Dollar Pares Earlier Losses after Fed's Attempt of a Hawkish Skip

US stocks dropped and king dollar returned after the Fed kept rates unchanged and signaled one more rate hike will happen this year. The US economy is too strong and this rate hiking cycle will last a lot longer than Wall Street wants.