A busy week of US data releases ahead have had an impact on dollar performance. And we share some other news, from the UK and Europe, that we think is worth your attention. War in Europe is sadly the status quo but comments from German Chancellor Merz solidify this sentiment, and in the UK, there’s some positive news around the FTSE 100, but is everything really rosy? Read on for more.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd | 1.1724 |
| gbp eur | 1.1534 |
| gbp usd | 1.3529 |
Rates correct as of 10:30am on Monday 1 September but may now have changed.
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
Dollar weakens ahead of key US data
The US dollar index hit a five-week low as investors look to a busy week of labour market releases and ISM manufacturing and services surveys for clues on the Fed’s next move. Concerns over a cooling jobs market have fuelled speculation about multiple rate cuts, with the greenback also weighed down by uncertainty over trade policy and questions around central bank independence. Despite clawing back some ground after three weeks of losses, the dollar remains under pressure as markets reassess the Fed’s easing path.
[Reuters]
Varied UK economy news paints mixed picture
Some positive news for UK economy? With interest rates on mortgages continuing to edge downwards following Central Bank rate cuts and data that shows August house prices are down, it could be good news for homebuyers however affordability is still a barrier. Add to that a UK Government that could be looking to increase taxes, and inflation that remains persistently high and the overall story is not quite as good. That said, it’s also been reported today that the FTSE 100 has outperformed markets across Europe and has risen, bolstered by high performing defence stocks. According to analysts “the FTSE 100 may have an opportunity to resume its ascent to new records”.
Merz sees no end in sight for war in Europe
German Chancellor Friedrich Merz has said he’s preparing himself for the possibility that the Ukraine-Russia war could continue for a long time to come. Despite recent talks and diplomatic manoeuvring from Donald Trump, the sentiment in Europe is robustly less optimistic. With the war now in its fourth year, neither side appears close to military defeat and the prospect of peace appears to lie only with capitulation to the aggressor, an outcome Merz says Europe cannot accept. He also signalled that he no longer expects a meeting to take place between Putin and Ukrainian President Zelenskiy. This does provide a level of uncertainty for the future however that is largely the status quo so far, so market impact will remain mixed.
Looking forward
Monday: Labor Day = US markets closed.
Tuesday: Eurozone and South Korea report CPI. US manufacturing data.
Wednesday: US job openings. The Fed releases its Beige Book.
Thursday: Canada balance of Trade. US Services PMI.
Friday: GBP Retail sales MoM. US and Canada publish August jobs data.
Here’s what we’re talking to our clients about
We’re always here to support. Here are some of the conversations we’re having:
- Possible Labour tax hikes – what would that mean for business.
- French political uncertainty and the EUR.
- Mixed data points in the UK – possible weaker view of economy indicated for H1.
The contents of this article do not constitute financial advice and are provided for general information purposes only.