The Pound strengthened against its major counterparts during Wednesdays trading session after the rate of unemployment fell to 4.5% in May, surprising analysts who had expected it to remain unchanged at a four-decade low of 4.6%. The data wasn’t all positive however as real wages continued to ease, increasing the pressure on British families to make it to the end of the month given the rising inflation.
At a press conference in Brussels, EU negotiator Michel Barnier said that Brexit talks could be derailed by an escalating fight over money as it fired back at Boris Johnson for telling the EU leaders to “go whistle” if they expected Britain to pay a divorce bill for withdrawing from the bloc. The UK’s Brexit secretary, David Davis, has not yet presented a formal UK position on the scale of any financial settlement when Britain leaves, which some estimates have suggested could be as a high as €100bn.
Janet Yellen testified at the Semi-annual Monetary Policy Report before the House Financial Services Committee in Washington DC and her comments were taken to indicate the central bank won't be hiking rates all that much.
The Fed believes it is not that far from the neutral rate which is where the benchmark rate does not boost or hold back the economy. Despite a major reaction in the bond markets some strategists believe this wasn’t major news. However, Fed Governor Lael Brainard discussed the issue on Tuesday and the market took her commentary as highly dovish.
13:30 – USD – Producer Pricing Index is expected to remain at 0%
13:30 – USD – Unemployment claims is forecast to decrease to 245k
15:00 – USD – Fed Chair Yellen Testifies