Daily Market Report - 23/07/2014

USD
 The Dollar had a mixed session yesterday after the weaker than forecast Core Consumer Pricing Index (CPI) was offset by strong existing home sales figures.
 
The CPI data revealed an increase of 0.3 percent after a 0.4 percent gain the prior month, indicating the rise in the U.S. cost of living in June was driven by a jump in petrol prices that is now reversing, bolstering Federal Reserve Chair Janet Yellen’s view that recent increases were temporary.
 
The core measure, which excludes volatile food and fuel costs, increased 0.1 percent, less than projected. Analysts believe US Inflation has failed to get a foothold as slowing global demand has prevented companies from exercising pricing power and If prices remain in check, Fed policy makers can keep interest rates low well into 2015.
 
On a slightly more positive note, US home sales climbed for the third consecutive month in June, hitting the highest level since October as the housing market gains steam after a temporary slump. 
 
GBP
The Pound lost ground  after data showed Britain’s public finances had a bigger deficit that expected in June, continuing a weak start to the tax year and leaving Chancellor George Osborne with a lot of catching up to do to meet his fiscal goals.
 
Fundamentally, the government failed to reduce public borrowing during the first three months of the 2014/15 fiscal year, possibly limiting its ability to offer any tax cuts or other voter-friendly surprises ahead of a national election in May next year.
 
EUR
The Euro-zone did grab the headlines last night after European foreign ministers failed to agree on fresh hard-hitting measures aimed at the Russian economy. Analysts are speculating that new sanctions including capital restrictions could be announced by Thursday if Moscow does not cooperate on the MH17 crash investigation. 
 
 Ministers discussed the possibility of extending the sanctions on the Russian economy to 'tier 3'. This would go beyond the existing asset freezes and visa bans to some 72 individual MPs and advisers to President Putin who supported the invasion of Crimea. One measure could include cutting off Russia's access to Europe's capital markets and actions to hurt Moscow's high-tech and energy sectors.
 
A number of countries, including the Netherlands, had called for new measures against Russia to target more individuals and consider introducing an arms embargo as the relationship between the nations becomes further strained.

France's surprising decision to go ahead with the delivery of a helicopter carrier built for Russia had cast doubt over the commitment among some of the EU's 28-member bloc to ratchet up sanctions, showing the division within the union.
 
The French President said the plan to deliver the two Mistral helicopter carriers was made in Paris and will go forward despite calls from the US and UK as no current sanctions impact the delivery. 
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Key Announcements
09:30 BST- GBP: Bank of England Minutes

09:30 BST- GBP: Bank of England interest rate vote count expected to be 9-0

15:00 BST- EUR- Eurozone consumer confidence (July) higher at -7.4 from -7.5

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