18/08/2017 - ECB Concerned About Euro Strength

EUR

Details of the European Central Bank’s Governing Council meeting for July were released yesterday, with the euro hitting a three-week low against the dollar after the ECB voiced its concerned about the euro “overshooting” in the future. In other words they’re worried the euro may strengthen too much. The reason for the concern is that the eurozone relies quite heavily on exports and a stronger euro could make those exports less attractive to buyers outside the 19-nation bloc.

Eurozone inflation rose by more than expected to the European Central Bank's target and core inflation increased to its highest level in more than three years. Eurostat estimated inflation in Europe was 1.9 percent year-on-year, up from 1.5 percent in March and just short of the four-year high of 2.0 percent recorded in February. Core inflation, which excludes volatile prices of energy and unprocessed food and which the European Central Bank monitors closely, also rose to 1.2 percent year-on-year in April from 0.8 percent in March, above market expectations of 1.0 percent. The core level was at its highest level since September 2013.

GBP

Retail sales was weak again in July, reflecting the hit to spending power from spiking inflation and fragile household confidence that is marking the build-up to Brexit. Retail sales account for around 30 per cent of household spending, which in turn accounts for around 60 per cent of UK GDP. Inflation was 2.6 per cent in July, up from just 0.6 per cent a year earlier, primarily reflecting the slump in the value of the pound in the wake of the Brexit vote

USD

A strengthening labour market remains key for U.S. growth as the number of Americans filing for unemployment benefits dropped to the lowest since February. With Initial jobless claims decreasing by 12k to 232k. The claims data are close to the 227,000 reported in late February, which was the lowest since the early 1970s. Business managers, posting jobs at a record-breaking pace, have been less inclined to fire workers and more focused on picking up staff amid a dwindling pool of unemployed.

Key Announcements

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