In a day packed with economic data and in the shadow of an interest rate cut, pause or raise midweek, the pound remained stable against all but the US dollar, against which it strengthened by just less than 0.50%.
There was a mass of data from the eurozone (and that continues today), starting with Germany’s economy shrinking by 0.1% in the third quarter (Q3, July to September). However, this was viewed as less bad than it could have been, and was followed up in the afternoon by Germany’s inflation rate falling ahead of expectations to 3.8%. That’s a drop from 4.5% last month, and is close to Spain’s 3.5%. Watch out for GDP and inflation data today.
The dollar was the loser overall, despite an almost complete lack of data. The dollar’s weakening could be blamed on an increasingly ‘risk on’ sentiment as fears of the Israel-Gaza war spreading lessen. However, the World Bank did warn, yesterday, that if it does spread then the oil price could hit $150 per barrel. The markets are also considering the interest rate decision tomorrow, Non-Farm Payrolls on Friday and bond-market turbulence more generally. There is a lot happening this week.
In Russia, in an attempt to shore up the rouble, new capital controls will prevent or restrict Western companies from withdrawing their money from the country in euros or dollars. Russia’s central bank raised its interest rate to 15% on Friday, as the rouble hit its lowest rate against the dollar since the very start of the Ukraine War.
In business news, a cap on bankers’ bonuses will be scrapped today. It has been blamed for lowering the competitiveness for the City for the best bankers.
In the US, the long-running car worker strike looks set to end after a climbdown from the car companies that will involve pay raises of roughly 25% over four years.
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