Economic slowdown remains a drag for the Eurozone but spells hope for the US economy
Today, UK labour market data will feature high on the economic agenda with the quarterly unemployment rate, ?monthly claimant count change and quarterly average earnings due. The cable is currently trading at 1.2515 in anticipation of these figures.
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The common currency is still struggling to recoup losses, after slipping by more than 250 bps since the start of the month. Uncertainty concerning the future monetary policy path of the ECB and a bleak economic outlook for the Eurozone are weighing on the common currency. In fact, ECB President Christine Lagarde will have to make a tough decision on Thursday as she ponders whether to hike for a 10th consecutive time or not. Inflation still remains high but the impact of rate hikes is being felt in the economy. Factory orders and output have plunged across the region while German building permits have fallen by more than 27% for the first 6 months of this year. With the high cost of debt, bank lending has also dipped. On the other side, employment remains quite strong in the Eurozone with an unemployment rate at a historic low of 6.4%. Today the economic calendar features German monthly WPI and ZEW economic sentiment for both Germany and the Eurozone. The fibre is currently trading at 1.0741.
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A recent survey from the Federal Reserve of New York reveals that access to credit has seemingly deteriorated in August, the job market outlook is bleaker especially with the unemployment rate growing by 3.8% and that the perception regarding inflation remains fairly stable.?Overall, the market interprets?these data as FOMC holding its guns at the at the policy meet next week and still derives hope pertaining to a possible soft-landing, especially due to the slowing down of the US economy. The 10-year note auction will be taking place today and the US Department of Agriculture is also due to publish the WASDE report. The greenback is currently trading at 104.62 against other majors, ahead of CPI data due tomorrow.