The euro is edging higher this Friday against the greenback, but we doubt this move will get past 1.06 given a lot of option strikes expiring at that level. It is important to remember that the Euro outlook remains bearish and should be set to resume its decline the next month as US data will likely give some voice to greenback bulls. Traders will look out for Christine Lagarde’s speech later today and the flash Eurozone CPI, which if it surprises to the downside will reassure markets that the ECB is likely done with its tightening campaign.
US Income and spending gauges for August due today are set to aid the Fed’s confidence about engineering a soft landing. Core PCE and Fed President Jerome Powell’s preferred “supercore” print, probably will come in softer for the third consecutive month but spending and income likely rose at a consistent pace.
The UK economy has proven itself stronger than previously thought, giving an extra boost to Prime Minister Rishi Sunak days before the conservative party starts its campaign. GDP was 2% bigger in the second quarter than estimates, leaving GDP 1.8% above pre-covid levels. The sterling advanced 0.3% against the greenback on the news, and it is currently trading at 1.2238. Against the euro, it is muted.
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