GBP

The pound found support yesterday recovering around half a cent against both the dollar and euro. It has remained steady in early trading. Bank of England governor Andrew Bailey echoed his recent message yesterday about the direction of monetary policy. Bailey repeated that the BOE will act on rates if inflation risks grow in an online question and answer session organised by the central bank. UK shoppers picked up their pace of spending in October despite concerns about rising inflation, according to a survey released by the British retail consortium today. The survey showed retail spending up by 1.3% last month compared to October 2020.

EUR

European Central Bank chief economist Philip Lane once again reiterated that the central bank has solid reasons to expect inflation to decline in the coming year. Lane said the temporary factors of supply bottlenecks and the recent surge in energy prices are expected to fade next year. After the recent comments from ECB president Christine Lagarde that policymakers are monitoring wages for signs of inflation risks, markets will focus on her speech at the central bank’s forum later today. In a further sign that supply chain disruptions are affecting the recovery of the bloc’s largest economy, data released this morning showed that German exports fell for the second consecutive month in September.

USD

The dollar has weakened against most of its major peers with a “risk on” trading environment making it difficult for the greenback to find much demand. US Federal Bank officials turned their focus toward a debate over monetary policy yesterday. Vice-chairman Richard Clarida said that while the central bank is “a ways away from considering raising interest rates”, if his current economic outlook proves correct the conditions for raising rates may have been met by the end of 2022. Meanwhile, St Louis Federal Reserve Bank President James Bullard was more “bullish” remarking that the Fed will need to raise rates twice next year.

Economic Calendar

13.00 EUR ECB President Christine Lagarde speech
13.30 USD Producer Price index
14.00 USD FED Chair Jerome Powell speech
16.00 GBP BOE Gov Andrew Bailey speech