European countries continue to see inflation rise.

The main pairs were confined to very narrow ranges for most of the day. A sparse data schedule may have contributed to the lacklustre price action on the exchanges. Of the limited moves to register, the euro was holding a slightly firmer tone. In level terms, the slightly firmer tone to the euro sees EUR/USD open this morning in the top half of $1.05-1.06. EUR/GBP is operating in the lower half of 86-87p. Meanwhile, GBP/USD is changing hands above the midpoint of $1.22-1.23, having briefly traded north of $1.23 yesterday.

The main release of note will be the latest reading of consumer confidence in the US. A further fall in the index is forecast for June. However, barring any major surprises, the data are unlikely to impact on currency markets. In terms of monetary policy, a speech from ECB President Lagarde at the Sintra Symposium will garner attention. Prepared remarks by officials from the BoE and the Fed, away from Sintra, will be in the spotlight also.

Households are cutting back on food shopping as the rising cost of living bites into budgets. Nearly half of adults surveyed by the Office for National Statistics said they had bought less food in the past fortnight due to higher prices. The price of food was also the most common reason for why those asked were seeing their monthly outgoings rising overall, the ONS said. Supermarkets Asda and Tesco have said customers are cutting back on shopping.

In Europe, Spanish 12-month inflation rose to 10.2% in June, the first time it surpassed 10% since April 1985, up from 8.7% the previous month, preliminary data from the National Statistics Institute (INE) showed on Wednesday. The reading was higher than the 9.0% forecast. Core inflation, which strips out volatile food and energy prices, rose to 5.5% year-on-year from 4.9% a month earlier, the INE data showed. Spanish European Union-harmonised inflation was 10.0% in the 12 months through June, up from 8.5% a month earlier.

Federal Reserve policymakers on Tuesday promised further rapid interest-rate hikes to bring down high inflation, but pushed back against growing fears among investors and economists that sharply higher borrowing costs will trigger a steep downturn. The Fed, she said, is therefore “tapping the brakes” by raising interest rates to cool demand.

The Fed earlier this month raised rates by three-quarters of a percentage point — its biggest rate hike since 1994 — to a range of 1.5%-1.75% to battle inflation that is at a 40-year high. Daly last week said she believes another 75 basis-point rate hike next month will be warranted, though on Tuesday she was not asked specifically about July’s meeting.

Economic Calendar

01:30AUD Retail Sales s.a. (MoM)(May)0.4%0.9%
08:00CHF ZEW Survey – Expectations(Jun)-70.7-52.6
09:00EUR Business Climate(Jun)1.26
09:00EUR Consumer Confidence(Jun)-23.6-23.6
12:00EUR Harmonized Index of Consumer Prices (YoY)(Jun)8.8%8.7%
12:30USD Core Personal Consumption Expenditures (QoQ)(Q1)5.1%5.1%
12:30USD Gross Domestic Product Annualized (Q1)-1.5%-1.5%
12:30USD Gross Domestic Product Price Index (Q1)8.1%8.1%
12:30USD Personal Consumption Expenditures Prices (QoQ)(Q1)7%7%
13:00USD Fed’s Chair Powell speech
13:00GBP BoE’s Governor Bailey speech
13:00EUR ECB’s President Lagarde speech

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.