Cool down, simmer

Market reports
Thanim Islam
  • China growth story not living up to expectations
  • Safe haven flows demand set to increase
  • Fed minutes in focus


GBP pushed on yesterday finishing broadly higher as per the GBP index, with the EUR lower and USD unchanged overall. Markets were generally quieter with US markets closed, but we should see an increase in volatility for the rest of the week.

China’s economy continues to show signs of cooling, with the services PMI index dropping to 53.9 in June from 57.1 in May.


Market rates

* Daily move - against G10 rates at 7:30am, 05.07.23

** Indicative rates - interbank rates at 7:30am, 05.07.23

Data points


  • EUR – ECB Nagel, Visco, Villeroy

Our thoughts

To kick things off we have the final services PMI number from Europe and the UK for the month of June, followed by producer price inflation numbers from Europe. Signs of this easing would suggest signs that overall inflation could be easing in the eurozone. Whether this influences money markets' pricing on interest rate expectations is another thing though, as the hawkish ECB narrative continues to support the EUR.

The Fed minutes will be in focus in the evening to assess how hawkish Fed members continue to be, after electing to hold interest rates in their recent meeting.

Chart of the day

The China growth story was one of the talking points towards the end of last year, and whilst activity has picked up, recent data has been disappointing with the performance of the economy not matching expectations. What does this mean for markets? Ultimately, we could see a dip in risk appetite going into the second half of the year and flight to safe havens. Early doors but nonetheless worth noting and it will be interesting to see if there is a flight to safety, what the markets seek. USD, JPY, CHF?

Source: Bloomberg Finance L.P.

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