Hot Weather, Cold Markets
Yesterday it was yet again a relatively quiet day, as the dollar handed back its modest gains from earlier in the week.
The main notable event yesterday was Fed Chair Powell’s testimony to Congress. He remarked that the US economy is expected to grow at its fastest pace in decades, however it is still too early to start stepping back from economic stimulus such as Quantitative easing. Chair Powell also noted that elevated inflation is likely to continue over the next few months. The market reaction was somewhat limited as the comments were as expected.
A softer tone to the dollar is shown by EUR/USD starting today back above $1.18. GBP/USD is trading at the midpoint of $1.38-1.39 and EUR/GBP is central of the 85-86p band.
This morning, we have already received a wealth of UK labour market data. The unemployment rate edged slightly higher to 4.8% in May, while employment was on the lower end of forecasts. Early trading shows this to have had a slightly negative impact on sterling.