The week opens with the dollar steady ahead of a series of Fed speakers, euro strength drawing ECB concern, and UK borrowing hitting a five-year high. Together, these developments highlight the balancing act central banks face between currency stability, inflation risks, and fiscal credibility.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd | 1.1751 |
| gbp eur | 1.1465 |
| gbp usd | 1.3478 |
Rates correct as of 09:25am on Monday 22 September but may now have changed.
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
Dollar steady as markets await Fed speakers
The dollar held firm on Monday as traders awaited comments from Fed officials, including Chair Jerome Powell. The dollar index was little changed at 104.65, having climbed 0.3% last week. Markets expect the tone of speeches to guide the dollar’s next move, with hawkish signals likely to lift it and dovish ones to weaken it.
[Reuters]
ECB warns euro strength could cap inflation
ECB policymaker François Villeroy warned that a stronger euro could cause inflation to undershoot the 2% target in the medium term. The currency’s recent gains have raised concerns about dampened imported inflation and slower growth. Analysts say the ECB may be forced to consider an earlier rate cut if the euro remains strong. Traders will be watching for any sign of a shift in the ECB’s guidance.
[Bloomberg]
UK borrowing surge pressures sterling
UK public borrowing reached £18.1bn in August, the highest August figure in five years. The overshoot has heightened concerns over fiscal sustainability ahead of November’s budget. Higher debt costs pushed gilt yields up, while sterling weakened as investors reassessed risks. Economists warn the fiscal outlook could limit the BoE’s policy flexibility.
[The Guardian]
Looking forward
- Monday: China loan prime rates decision, Eurozone consumer confidence.
- Tuesday: UN General Assembly (New York), OECD interim outlook
- Wednesday: Australia CPI, US new home sales.
- Thursday: Switzerland rate decision.
Friday: US PCE & personal income, University of Michigan consumer sentiment, Japan Tokyo CPI.
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:
- Keir Starmer’s recognition of a Palestinian state
- The Fed’s interest rate path for the remainder of the year
- The UK’s weak growth outlook
The contents of this article do not constitute financial advice and are provided for general information purposes only.