UK fuel pump prices highest in 8 years

Somewhat predictably, the price of fuel at the pumps in the UK has risen to the highest levels in 8 years as BP’s driver shortages have spilled over into frenetic buying. Army drivers have been called in to support the effort to get fuel to the pumps. Sterling hasn’t been as damaged by all of this nonsense as you might have thought but a lack of UK data today does leave the Pound vulnerable to selling pressure.

The US dollar lost a little ground yesterday despite, ostensibly, better than expected durable goods orders. The Monthly rise of 1.8% in August was more than double the market expectations but the core level only grew 0.2% and that was worse than forecast. The core figure excludes transport products and is considered a more stable measure because aircraft sales are huge capital items and can distort the numbers.

Supply chain bottlenecks cause concerns in US and elsewhere

Other factors driving the USD are calls from federal reserve speakers for tighter monetary policy through a reduction in bond buying and interest rate hikes starting in the early part of 2023. Those factors would normally strengthen the USD but fears of supply chain bottlenecks (sound familiar?) are causing concerns for the recovery of the USA. Hence the GBPUSD rate rose to $1.3715 before sliding again. That is down to $1.3675 this morning and still in decline.

The EURUSD rate is also slipping. That is down to $1. 1675 as I write. There is room for further USD strength and, having seen improved German consumer confidence this morning (courtesy of the Gfk survey), the euro is awaiting a deluge of speakers from the European Central Bank, including head honcho, Christine Lagarde. The GBPEUR rate is still trapped in that €1.17 to 1.1750 range.

US news will include the first day of Jerome Powell’s testimony to congress, a slew of other Federal reserve speakers and a speech from Treasury Secretary Janet Yellen. In addition we will get a US consumer confidence index.

The Japanese Yen is weaker as investors are being lured away by rising bond yields in the EU and US, related to monetary policy expectations. GBPJPY back above JPY 152 this morning.

GBPNZD at one month high

We are seeing half a cent spikes and troughs in the GBPAUD daily. That’s a sure sign of uncertainty amongst traders and investors. The GBPAUD rate starts at 1.8815 this morning. GBPNZD is similarly volatile but this pair has risen to NZD 1.9585 this morning; the highest it has been since 30th August. There don’t appear to be definitive reasons for the NZD weakness but nervousness over the pace of the global recovery, supply chain concerns, which are emerging all around the globe and potentially higher yields in the US and EU are likely to see the Kiwi Dollar lose a little ground.

And the US Democratic party is considering making US banks report any client account with more than $10,000 in it to the US tax authorities (the IRS). George Orwell is proving to be more of a soothsayer with every passing day.

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