ECB on hold until 2% inflation achieved

The European Central Bank left everything on hold when they met yesterday. That was entirely expected. They renewed their commitment to keeping things that way until inflation hits 2.0%. Based on their forecasts, that may take another two years. They could take some time off I guess if there is nothing to do until then.

However, anyone in business will tell you the cost of raw materials and shipping has skyrocketed, so there is a lot of pent-up inflation coming through the supply chain. The ECB and all central banks will have to revise some time soon unless this cost rises ebb. For now, the Euro is on the back foot. The EURUSD rate has been trending lower since late May and starts Friday at $1.1770.

GBP rally peters out

Sterling started Thursday looking like it might mount a recovery but the rally petered out late last night. Overnight data releases included a minus 7 reading on the UK’s Gfk consumer confidence index. That’s negative but better than it has been. However, UK retail sales in June were a little softer than had been forecast but it was still a bounce-back of sorts. So, having failed to reach USD 1.38 yesterday, the Pound is back down to $1.3750 this morning. We will get a trio of purchasing managers indices for the UK this morning. All three are forecast to be positive but none stronger than the previous month. The Pound won’t rally or decline unless the actual data is wildly different to the forecasts.

Surprise jump in US unemployment claims

Part of that USD weakness is down to a surprise rise in fresh US unemployment claims. 419,000 American’s filed for welfare due to unemployment last week. That is 50,000 higher than had been expected and it shows the lingering uncertainty over the US’s recovery from the pandemic. Like the UK diary, US data includes a trio of PMI’s today and, like the UK, the forecasts are positive but unlikely to show strong reasons to buy the USD.

Canadian retail sales this afternoon

Canada will release retail sales data this afternoon. A 3.0% monthly decline in sales is forecast and that would add pressure to the Canadian Dollar. Having looked very encouraging earlier in the week, the GBPCAD rate is down to CAD 1.7285 this morning. That’s nearly 3 cents below the high of the week but the trend is upwards. If the retail data is worse than expected, this could easily rise again.

And it is hard to believe that Saving Private Ryan was released on this day in 1998. Where did that 22 years go?

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