IFX Market Report: Friday 16th September 2022

Inflation stays stable at 9.1% in the European Union as Germany and Italy saw inflation rise to 7.9% and 9.0% respectively in August but Spain and France saw inflation decrease to 10.4% and 6.1%. Both governments in Germany and Italy have approved multi-billion euro packages to slow down inflation and help families and businesses facing a surge in energy prices. Germany adopted a €65bn relief package earlier this month and Italy adopted a €17bn package on the same day.

In the United Kingdom, inflation has gone down to 9.9% in August from 10.1% in July. Retail sales dropped by -1.6% in August, much worse than the expected -0.5%. However, GDP figures were back in the positive with a 0.2% growth for July. The United Kingdom trade balance also the deficit reduced by over £3bn, despite forecast expecting a reduction of the deficit of only £550mm. The unemployment rate also went down to 3.6% in July from 3.8% in June.

The United States also saw a slowdown of inflation in August as it dropped to 8.3% from 8.5% the month before. Most experts expected inflation to drop to 8.1% but the data shows inflation could be slowing down, nevertheless. Retail sales were also on the positive in August as they increased by 0.3% but industrial production dropped to -0.2%.

Next week, the Federal Reserve of the United States, the Bank of Japan and the Swiss National Bank are all set to make a decision on interest rates. We will also see PMI figures for the Eurozone on Friday.

Cable saw the dollar strengthen ahead of next week’s Fed interest rate decision. GBPUSD opened at 1.1545 and closed at 1.1463.

GBPEUR saw dipped by -0.81%. The pair opened at 1.1557 and closed at 1.1459.

EURUSD saw the euro recover slightly as inflation figures for the eurozone saw a potential slowdown of inflation in Europe. The pair opened at 0.9980 and closed at 0.9999 yesterday.

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