Snapshot – 14th September

14th September 2018

Currency price action in the majors has been particularly subdued in the past 48 hours despite a raft of macro data and the ECB and BoE policy meetings. Markets are seemingly taking a breather ahead of a heavy calendar of events for Q4.

The Dollar has lost a bit of ground but not as much as would have been expected following weak US CPI-inflation, retail sales and manufacturing data for August. This suggests that markets still expect two more Fed rate hikes to be locked in for the remainder of the year and are for now not worried about whether the Fed will hike rates as aggressively in 2019.

Sterling and the Euro have been broadly stable in trade-weighted terms following the two central bank meetings yesterday and the GBP/EUR cross has oscillated in a narrow range around 1.12 for the past four sessions. The Bank of England noted the likely pick up in UK GDP growth in Q3 from 0.4% qoq in Q2 but remains very nervous about the longer-term outlook for the British economy in the context of an increasingly uncertain Brexit path.

Conversely, the European Central Bank revised its 2018 GDP growth forecast for the Eurozone fractionally lower but remains confident that it will be able to start reducing its asset purchases as of October as planned.