IFX Market Report: Thursday 14th July 2022

Yesterday data from the US showed that inflation rose 9.1% in June, more than expected and puts pressure on consumers. Analysts expected a 8.8% CPI increase, excluding food and energy core CPI rose by 5.9%, more than the 5.7% estimate.

This increase, coupled with the Q1 GDP results at -1.6%, are pushing markets to bet on a Fed interest rate increase of 1% this month. This has proved to be bullish for the greenback with dollar index gaining 0.43% this morning and USDJPY jumping by 0.69%.

The euro clings on to parity and puts pressure on the ECB to increase interest rates ahead of next week interest rate meeting and CPI figures for the eurozone. PMI will also give an overview of the impact of inflation on businesses in Europe.

In the United Kingdom, yesterday saw the Tory leadership race eliminate Jeremy Hunt and current chancellor Nadhim Zahawi. Sir Graham Brady announced all the other candidates - Kemi Badenoch, Suella Braverman, Penny Mordaunt, Mr Sunak, Liz Truss and Tom Tugendhat - had at least 30 votes, with Rishi Sunak leading the race. There will be more ballots until two candidates remain, a face-off that should end with the results announced on the 5th of September when the Commons meet again, with the winner set to take over from Boris Johnson the next day.
Cable remained stable yesterday. GBPUSD opened at 1.887 and closed at 1.8889.

GBPEUR saw the GBP lose some momentum. The pair opened at 1.1840 and closed at 1.1813.
EURUSD sees the euro cling on parity. EURUSD opened at 1.0040 and closed at 1.0060

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