Cable, Euro Push Higher Ahead of FOMC Minutes

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Mild risk on in stocks
Dollar weakness persists
Nikkei 0.226% Dax 0.35%
UST 10Y 0.65
Oil $42
Gold $1993/oz
BTCUSD $11825

Asia and the EU
GBP UK CPI 1.8% vs. 1.3%

North America Open
USD FOMC Minutes 14:00

Its been a typical summer lull session in both equities and FX with markets essentially listless but the bigger trends of weak dollar positive stocks and steady gold remained in place.

On the eco from UK inflation data printed hotter than forecast at 1.8% vs. 1.3%. According to ONS the big bump in price levels came from recreation and culture as lockdowns ended and people returned back to the streets. The core inflation reading remain below the 2% barrier but the recent month over month increases suggest that price pressures are building and could push higher if Brexit issues are not resolved.

The news helped to keep the pound bid as all talk of negative rates from BoE is likely off the table for now.

The dollar in general remains under pressure, falling to its lowest level in more than 2 years and although the anti-dollar rally is clearly stretched there are no catalysts to cause any short covering for now.

Equities meanwhile remained mildly bid as the weak dollar is actually supportive for many US multinationals with large revenue exposure from abroad. The primary eco focus today will be on FOMC minutes with the market expecting the Fed to maintain a dovish tone. Still, any mention of curbing the easing stance will be viewed favorably by stocks which could swoon on even a tiny hawkish tilt in policymakers discourse while the buck could get a much-needed boost if the minutes reveal any upside surprises.

Boris Schlossberg
Managing Director

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