30 Aug 2019

Dovish Lagarde pushes euro lower

Ahead of taking her new role as ECB President in November, Christine Lagarde, yesterday made her first public comments in that capacity. 

She said that the European Central Bank still has room to cut interest rates if needed, although this may pose a financial stability risk. “The ECB has a broad tool kit at its disposal and must stand ready to act,” Lagarde said in written answers to the European Parliament’s committee on economic affairs. “While I do not believe that the ECB has hit the effective lower bound on policy rates, it is clear that low rates have implications for the banking sector and financial stability more generally”. 

Slightly more hawkish comments from Dutch central bank governor and ECB council member, Klaas Knot, did little to halt the slow but consistent grind lower. He said that he thought that “there is no need to resume QE right now” and that he “would be reluctant to back tiering for negative rates”. 

The benchmark EUR/USD rate opens at multi month lows of in/around $1.1030 at the European open this morning.

UK consumer confidence drops

UK consumer confidence fell by three points to -14, according to the August survey by GfK. This is the lowest reading since January, with GfK attributing some of the weakness to Brexit uncertainties.

All of the sub-indices fell back, and the largest falls were recorded in the ‘personal situation over the next 12 months’ (down 5 points) and the ‘general economic situation over the next 12 months’ (down 6 points). 

Later this morning we will get to see UK mortgage approval, consumer credit and money supply data for July.


Economic Releases

09.30  UK   Consumer Credit

09.30  UK   Money Supply

10.00  EU   CPI

13.30  US   PCE