Central Bank Moves Set Stage for PMI & PCE Data
Last week’s highlights:
- Federal Reserve: Interest rates cut 0.25% to 4.25% reflecting softer labour market conditions and moderating inflation. The USD weakened on the decision, but outlook now depends on incoming data.
- Bank of England: Held interest rates at 4% and slowed its bond sales programme. UK inflation at 3.8% (August) remains stubborn, keeping the BoE cautious.
- European Central Bank: (11 September) left interest rates unchanged with euro area inflation at 2%.
Current inflation:
- UK CPI: 3.8% – Still elevated
- US CPI: 2.9% – Trending lower
- Eurozone CPI: 2% – Target
Current interest rates:
- UK: 4%
- US: 4.25%
- Euro Area: 2.15%
Key events this week:
- Flash PMIs (23 September): Updates on UK, Eurozone, and US growth.
- US core PCE (26 September): The Fed’s preferred inflation gauge, crucial for USD direction.
- Fed speakers: Market will watch for guidance following last week’s rate cut.
Outlook:
- USD: Direction hinges on Core PCE. Softer reading could weaken USD; stronger print may trigger a rebound.
- GBP: BoE’s inflation concerns provide some support, but weak UK PMIs would pressure sterling.
- EUR: Likely range bound unless Eurozone surprise significantly.
Why this matters
This week’s data releases could spark sharp moves in currency markets. For businesses and individuals with upcoming FX needs, even small shifts can have a meaningful impact on costs and margins. Our team can help you manage the risks and position yourself to benefit from opportunities.
📞 020 3876 5432 | 📧 [email protected]