Trump blames Democrats for Covid-19 stimulus delay.

Despite positive consumer inflation data yesterday the US dollar slid against both the Euro and Sterling.  The dollar fell on Thursday amid fading hopes that a compromise will occur between Republicans and Democrats over additional stimulus for the economy. President Donald Trump has accused congressional Democrats on Wednesday of not wanting to negotiate the US coronavirus aid package.

Although market sentiment has swung between optimism and pessimism, analysts see the most likely outcome being more stimulus as without it the US recovery would likely falter.

Britain’s economy shrank by a record 20.4% in the second quarter – a substantially bigger slump than in the euro zone (12.1%) or United States (9.5%), data on Wednesday showed. This contraction was largely priced in by market participants despite it dwarfing any decline previously seen in the UK.

Investor sentiment around sterling is still generally bearish, unemployment is expected to rise further as the furlough scheme is wound down forcing more employers to lay off staff. Given that the rally we have seen in the cable rate is centred around dollar weakness there will be considerable attention on up coming UK data.

Economic Calendar

Expected Previous
12:01 RICS House Price Balance -5% -13%
12:50 PPI y/y -1.10% -1.60%
02:00 MI Inflation Expectations - 3.20%
02:30 Employment Change 30.0K 228.4K
N/A Unemployment Rate 7.80% 7.40%
07:00 German Final CPI m/m -0.50% -0.50%
N/A German WPI m/m 0.40% 0.60%
13:30 Unemployment Claims 1120K 1186K
N/A Import Prices m/m 0.60% 1.40%
15:30 Natural Gas Storage 51B 33B
18:01 30-y Bond Auction - 1.33|2.5
23:30 BusinessNZ Manufacturing Index - 56.3

*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.