The Bank of Canada kept their interest rates on hold at 2.25% yesterday as expected, with the central bank pointing to the continuing conflict in The Middle East keeping energy prices higher. On top of this, new US tariffs and countermeasures by Canada have been announced following the initial breakdown in talks. Overall, recent economic data out of Canada has shown the economy recovering, albeit slowly. With GDP for the second quarter growing by 3.3%, and the unemployment rate for July dipping to 6.4%. But the uncertainty surrounding the Middle East has led to a further hold on interest rates.
Oil prices have retraced a little in the early hours of this morning as Donald Trump stated that the renewed attacks on Iran would not last for much longer. U.S forces had struck Iran’s southern coast yesterday, however Trump’s comments have helped to ease some tension within markets.
Swiss Inflation released this morning for August came out at double the expectation, with figures climbing from 0.4% to 0.8% with higher petrol prices, diesel and Oil all contributing to the increase. Notably, August’s figures of 0.8% represent the highest level of inflation since July 2024. This has also been seen across Europe, with Euro-Zone inflation reaching near 3-year highs on earlier this week, as the Middle Eastern conflict continues to effect energy prices globally.
At the top of the hour, we have Euro-Zone Producer Inflation for July, which is also set to show an increase of roughly 1.5%. If the release matches expectations, we could see some Euro strength as it could lead to further interest rate hikes in the coming months.
Elsewhere, the Japanese Yen has strengthened this morning after markets increased bets on more aggressive interest rate hikes throughout the coming months. Rising bond yields globally was becoming a concern for many governments, but Japan have successfully sold a portion of 30-year government bonds in order to ease investor fears. The Yen has climbed 1.4% percent against the Dollar, with investors and markets anticipating a potential intervention by the Bank of Japan.
GBP/EUR 1.1618 GBP/USD 1.3488 GBP/AED 4.9559
GBP/AUD 1.8780 GBP/CHF 1.0912 GBP/CAD 1.8632
GBP/NZD 2.3005 EUR/USD 1.1596 GBP/ZAR 21.6709