Calm after the Fed

3 minute read


The consumer price index data put headline inflation at 1.6, down from 1.8%, and core inflation excluding food and energy at 2.1%, up from 2.0%. The numbers are not likely to affect the Federal Reserve's decision at the end of the month.

When the Fed chairman visited the Senate Banking Committee yesterday, his story was no different from the one he told the House on Wednesday - and indeed no different from his stated position a month ago. The economy is in "a good place" but "business investment is critical. It has really slowed down here, and one of the reasons is uncertainty around trade and global growth…  I think many of my colleagues on the FOMC have come to the view that a somewhat more accommodative monetary policy may be appropriate". With no change to his message the USD went almost nowhere.


German wholesale prices went down by 0.5% in June and were 0.3% higher than a year earlier. Euro zone industrial production was 0.9% higher on the year after falling 0.5% in May. The production numbers were quite a bit better than the -1.6% monthly and +0.2% monthly predictions but had no impact on the EUR; investors pay more attention to the already-known situation in Germany.

The account of the ECB's Governing Council meeting in June indicated no change to interest rates "at least through the first half of 2020". That is not to say that other measures cannot be brought in to provide stimulus before then. The EUR is 0.1% lower on the day - no more than a rounding error.


As oil prices moved to a seven-week high, with WTI crude up by 6.6% on the week, the CAD continued its advance. The Loonie is 0.1% higher against the USD. 

The widely-ignored new housing price index provided the only Canadian data on Thursday. Prices fell 0.1% in May and were unchanged on the year.


Introducing the Bank of England's Financial Stability Report yesterday, governor Mark Carney was optimistic about the risks of Brexit and trade wars to the UK banking system. He said "The system would continue to serve UK households and businesses even if worst-case disorderly Brexit occurred at the same time as a global slowdown triggered by a trade war". He also, in passing, allowed himself to be considered as a replacement for Christine Lagarde as head of the IMF.

There were no UK economic data on today's list. The GBP is unchanged against the USD.


For no obvious reason, the safe-haven JPY and CHF have drifted to the back of the field over the last 24 hours. The yen is 0.3% lower against the USD, perhaps partly in compensation for its overdone gains the previous day.

Industrial production and capacity utilization data released overnight were not wholly inspiring. On the face of it, the 1.7% increase in capacity utilization was more positive than the forecast 0.2% rise but there could be factors at work other than higher demand, such as a reduction of unneeded capacity. A 2.0% monthly rise in industrial production was balanced by the 2.1% annual decline.

Sign up for a free account

Sign up for a free account

Access our convenient and secure online platform to process your international payments. Manage beneficiaries and view payment status and history at the click of a button.

Find out more
FX business solutions

FX business solutions

We provide tailored services to help companies make international payments and manage their foreign exchange risk

Find out more