The Federal Reserve minutes for their July meeting brought some further respite for The US Dollar as it largely reiterated the wait and see approach regarding cutting interest rates. Although two members had voted for a cut in July, it was evident that a large majority of members still favoured no immediate cuts as concerns were still in play for Donald Trump’s trade tariffs.
Bets on a September rate cut have now fallen from pretty much 100% down to a 78.4% chance of a 25 basis-point cut next month. Markets are now turning their attention to Jerome Powell’s speech at the Jackson Hole conference tomorrow for any further hints on the direction of interest rates in The U.S.
Another concern causing a headache for The Federal Reserve is Producer Price Inflation which grew 0.9% last month, again beating expectations of 0.2%. Year-On-Year figures also grew to 3.3% with tariff price pressures now ultimately coming through. The knock-on effect here is that when Producers face price pressures, ultimately these price rises will be passed onto consumers at some point which again will keep inflation elevated. All of this effectively consolidates the July meeting minutes last night of the wait and see approach.
Keeping with The U.S, we round the day off with weekly jobs data which although markets are keeping a stern eye on, The Federal Reserve are focusing more on inflation when weighing up interest rate cuts or not. Either way, what we are seeing is further struggles within the jobs market as both Initial Jobless Claims & Continuing Claims are both forecast to increase again which will only weigh further on The US Dollar moving forward.
GBP/EUR 1.1532 GBP/USD 1.3456 GBP/AED 4.9409
GBP/AUD 2.0953 GBP/CHF 1.0830 GBP/CAD 1.8680
GBP/NZD 2.3124 EUR/USD 1.1645 GBP/ZAR 23.8966