In the early hours of this morning, Australia’s inflation figures for July were released. Although the yearly figure came in lower than previous, it was still higher than forecasts expected, hitting 3.5% alongside the monthly numbers rising by 1%, against expectations of 0.8%. The release shows that Australia is still battling inflation and therefore makes the possibility of an interest rate cut less likely. Markets are now pricing in a 25-basis point hike in November’s meeting.
Elsewhere, the U.S and Canada are hitting each other with retaliative economical tariffs as the trade war between the two continues to develop. Canada yesterday stated they will impose duties of 15%, 25% and 50% across 700 products, including steel and appliances that are imported into The U.S. These tariffs are set to take effect from the 8th of September. This move has developed after talks between both parties broke down last week, with Trump’s administration implementing tariff increases on Canadian goods such as Alcohol, Wood Products and Clothes. As this trade war develops, it is likely that both businesses and consumers feel the cost through increased inflation, as well as potential economic slowdowns.
Sticking with The U.S, we have a basket of data due out this afternoon, in the form of Core Personal Consumption Expenditure (The U.S’s preferred inflation measure), GDP, Personal Income and Personal Spending. All focus will be on the PCE release which gauges whether the price of goods purchased by consumers is increasing or not, an increase would put more pressure on The Federal Reserve to act through interest rate hikes.
Turning our attention to The UK, we have seen this morning Ofgem have announced a 4% rise on the energy price cap in October, which is worrying when taking into consideration the impact this will have on inflation in general as we enter the winter months. It was also reflected in last month’s Bank of England meeting when Governor Andrew Bailey stated that he expects inflation to climb back above 3% before dropping lower again.
GBP/EUR 1.1664 GBP/USD 1.3625 GBP/AED 5.0062
GBP/AUD 1.8972 GBP/CHF 1.0939 GBP/CAD 1.8887
GBP/NZD 2.2875 EUR/USD 1.1665 GBP/ZAR 21.7214