Belfast isn’t the first place that springs to mind when discussing fine dining in Europe, but it is if you’re trying to gauge the level of support you’re getting from Arlene Foster. Head honchos from the coalition DUP party got the call up last night to sit with Boris prior to his final speech in Northern Ireland today, I’m sure pizza wasn’t on the menu this time. While Johnson toured the devolved nations, sterling had a trip itself but to climates further south. The pound carved fresh lows against the dollar yesterday, marking the monthly decline as the largest since the referendum in 2016 – not a good time to be a Brit abroad on holiday. Today, the pound is fairing slightly better in the run-up to this evening’s US rate decision, but the subdued levels of British currency pose warning signs to the UK economy. With such political ambiguity the positive effects on the current account due to a weakened currency are unlikely to occur, but inflationary pressure could begin to mount in the coming periods, especially if sterling remains at low levels against the US dollar and euro for a sustained period of time.


EUR crept higher against the dollar for the second day in a row on the back of slightly stronger than expected German inflation data. The national July Flash Consumer Price Index rose to 1.7% year on year, higher than the 1.5% penned in by the consensus of analysts beforehand. This stronger rise was mostly caused by higher energy and clothing prices, while communication prices continued their fall. This single data point will not be enough to keep the European Central Bank from cutting rates in September, we expect, even if the Eurozone wide Flash CPI reading today at 10:00 BST will deliver a beat of similar magnitude. The first Gross Domestic Product reading will then also be released, which will tell us how the divergence between the Services and Manufacturing sector will have the economy fare as a whole.


Love Island may have finished for the year, leaving many without their dose of drama in the evenings, but tonight the Federal Reserve’s rate decision will fill that void. Markets have aggressively priced a string of rate cuts by the Federal Reserve this year, beginning with tonight’s meeting, but analyst projections currently conflict the market’s outlook. With US data remaining firm, many believe it is inconceivable for the Fed to issue guidance on further monetary policy easing pre-emptively, especially given the Fed’s track record for generally sitting behind the curve. The divergence in expectations points to one result, tonight’s press conference will generate market volatility. The rate cut itself may have muted impact but with fresh projections and a press conference for markets to sink its teeth into, dollar crosses are susceptible to repricing in today’s evening session. Arguably, there is more upside risk to the dollar given the solid US data. That being said, the link between US fixed income pricing and that in foreign exchange markets for the dollar doesn’t necessarily match up one-for-one. If the Fed begins to bow to fixed income market pressure, and signal a more accommodative policy in the coming quarters, the dollar could begin to look soggy. Markets are likely to remain subdued in the run-up to tonight’s main event, scheduled in the calendar for 19:00 BST, as the Fed’s outlook could flip global macro conditions.


This week the loonie has progressively clawed back last week’s losses but has failed to show a substantial retracement as of yet. However, the stars have aligned today with the release of May’s GDP at 13:30 BST, the US Department of Energy’s inventory data at 15:00 BST, and the Federal Reserve’s interest rate decision at 17:00 BST. Canada’s economy is expected to have moderated in growth following the recent rebound from Q1. Analyst expectations sit at a measly 0.1% MoM gain, suggesting there is capacity for the data to surprise to the upside. On a yearly basis, growth is expected to level out to 1.3%, which is also the pace of growth the Bank of Canada expects for 2019. Should the Federal Reserve signal further rate cuts this evening, the loonie remains poised to make a sustained rally back towards levels seen in mid-July due to firm domestic economic data.