Update -

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

11th September 2020

Category

Macro Commentary

Bank of England officials this week were rather downbeat on the economic outlook, indicating further QE is likely, possibly in November with the UK facing the challenges of a potential second wave, the end of furlough, and the impending Brexit.

UK data this week, however, was relatively positive, particularly house prices which have hit an all-time high, helped by the stamp duty holiday.

In the US, the political standoff on the next economic support package continues, whilst relations with China have escalated further.

Stock markets, however, hit record highs following some encouraging US data this week.

Today the market is focused on the vitally important US payrolls figures, due out at 1.30pm, ahead of the US bank holiday on Monday.

In Europe, inflation turned negative for the first time since 2016, ahead of next week’s ECB meeting, where we expect no change in policy.

Brexit talks continue, but both sides remain a long way apart on many key issues as we move towards the October deadline.

On the exchanges, the dollar has recovered a little after trading at a fresh 2-year low earlier this week.

GBP/USD hit a year-to-date high of 1.3480, just ahead of last year’s high of 1.3510, before easing back below 1.3300. We continue to expect a 1.3000 – 1.3500 range for now.

GBP/EUR has been unable to hold above 1.1250 but remains near its recent highs. Significant support remains at 1.1000.

 GBP/USD 1-year chart

Week Ahead

Date

Release

Last

Expected*

15/9/20

UK Average Weekly Earnings 3M/YoY

-1.2%

n/a

15/9/20

UK Unemployment Rate

3.9%

 n/a

15/9/20

UK Employment Change 3M/3M

-220k

 n/a

16/9/20

UK CPI YoY

1.0%

 n/a

16/9/20

UK RPI YoY

1.6%

 n/a

16/9/20

UK House Price Index YoY

2.9%

 n/a

16/9/20

US FOMC Rate Decision (Lower Bound)

0.00%

0.00%

17/9/20

UK Bank of England Bank Rate

0.10%

0.10%

18/9/20

UK Retail Sales YoY

1.4%

n/a

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.1835

AUD/USD

0.7285

GBP/USD

1.2840

USD/AED

3.6730

GBP/EUR

1.0845

GBP/AED

4.7170

USD/CHF

0.9100

EUR/AED

4.3480

USD/JPY

106.20

XAU/USD

1943

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

6003

-20.41%

S&P

3339

+3.36%

EUROSTOXX

3312

-11.54%

DFM GENERAL INDEX

2270

-17.87%

UK Benchmark Rates

Libor

 

Swap Mid

 

3 month

0.05950%

2 year

0.06%

6 month

0.09088%

3 year

0.08%

12 month

0.17975%

5 year

0.17%


View Arbuthnot Latham’s Private and Commercial deposit rates.

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