The Dollar ended yesterday’s session marginally weaker and is down again today. It has now weakened for four consecutive sessions by a cumulative 0.8%.
But whereas yesterday it was mainly the Euro which was outperforming, Sterling, the Australian Dollar and to a lesser extent the Kiwi Dollars have joined the rally.
The GBP/USD cross is back above 1.26 and GBP/EUR has been broadly stable above 1.10. Both core and headline CPI-inflation in the UK rose slightly from May, to respectively 1.4% yoy and 0.6% yoy, and were slightly stronger than expected which has seemingly given Sterling a bit of a leg up this morning. While UK inflation remains low in absolute terms, the
pick-up in inflationary pressures points to a modest recovery in demand in June and will be welcome news to the Bank of England.
Focus this afternoon is likely to turn to the release of the New York Fed Empire State manufacturing index for July. This will provide an early indication of how the US manufacturing sector fared in the first half of July. The consensus forecast is that the index was positive (+9.3) for the first time since February.
