Spreadex Market Update
UK inflation rises by 0.6%, sending pound sharply higher against dollar
This news provided a much-needed moment of respite for the pound, which surged by nearly 1% against the dollar to climb back towards 1.30. It wasn’t so lucky against the euro; having hit a fresh 3 year low this morning sterling could only climb by 0.1%, taking it back above €1.15. The FTSE’s post-inflation reaction was far calmer, the index continuing to trade the same 20 points lower as it was at the start of the session.
Over in the Eurozone the DAX and CAC had their own data to deal with in the shape of the German and region-wide ZEW economic sentiment readings. The latter came in at a much improved 4.6, against the -14.7 seen last month, and higher than the -6.3 forecast; the German figure, however, disappointed, managing a paltry 0.5 against the 2.1 expected (and -6.8 in July). That left the DAX with a near half a percent decline, while the CAC slipped by 0.2%.
Looking ahead to the afternoon and Tuesday’s deluge of data continues. The headline figure will be the latest US inflation number, expected to fall back to 0.0% from 0.2% last month (helping explain why the dollar has looked so weak against the pound this morning). Joining that CPI reading is the industrial production figure, which is forecast to drop from 0.6% to 0.2% month-on-month. Understandably none of this has the Dow Jones too excited, the futures pointing to a 15 point slip after the bell.
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