Quiet enough in FX markets

The euro and sterling both drifted down against the dollar during the course of yesterday’s session, hitting lows for the day of around $1.0510 and $1.2630 respectively but remaining within their recent relatively narrow trading ranges. They are both a bit firmer this morning, at around $1.0540 and $1.2640, while EURGBP is once again not much changed trading at £0.8330.

Government bond yields were little changed yesterday, ending largely flat overall, while it was something similar in equity markets, with US indices closing unchanged to marginally higher and European stocks finishing modestly lower.

Fed Governor Cook believes “it likely will be appropriate to move the policy (interest) rate down toward a more neutral stance over time,” but adds that the “magnitude and timing” of rate reductions is uncertain.” Her Fed colleague Bowman  is similarly cautious, saying her preference is to lower interest rates gradually, especially in light of still “elevated” core inflation (currently running at 2.7%).

ECB member Stournaras says “inflation is now more likely to converge sustainably to the target (2%) sooner than earlier expectations — by the beginning of 2025 instead of the last quarter of next year, as was anticipated in the most recent ECB projections,” adding that “our policy focus may have to increasingly take account of economic conditions so that we don’t undershoot our inflation objective.”

It is relatively quiet on the economic data front today, with consumer confidence due in the Euro area and jobless claims and existing home sales scheduled in the US. There are a number of ECB and Fed members speaking during the course of the day also.