Markets negated by lack of stimulus
The Pound/Dollar failed to capitalise on the previous week gains and was held at a resistance barrier below the 1.3900 mark. This was due to trade talks being halted right in the middle of proceedings.
The Euro against the Dollar is running at lows near 1.1850, changing its course from 1.1875. This is due to ECB President Lagarde once again pouring cold water on consumer spending giving a hawkish expectation. The US dollar rebounds amid a cautious market mood, ahead of the critical US inflation data. Barclays research notes that the USD reaction to inflation surprises has significantly increased, and inflation increases could bring tapering discussions back to the table which will lead to a stronger Dollar.
Boris Johnson yesterday announced the lifting of England’s COVID restrictions from 19th July whilst warning covid cases could reach 100,000, and government scientists expect daily English hospital admissions will rise between 1,000 to 2,000 a day, with deaths hitting to 100 to 200 a day within weeks.
Ultimately It has been a generally quiet start to the week on financial markets yesterday. A shortage of data releases from the macro schedule on both sides of the Atlantic likely contributed to the lacklustre action.