In the end, it wasn’t the fairly uninteresting updates from the Bank of England or the ECB, nor a much-need, and huge, rise in interest rates from the Central Bank of Turkey, that got the markets moving this Thursday, but rather a disappointing inflation reading from the US.
Not that August’s CPI data is completely unrelated to some central bank drama. Ostensibly the disappointing figures – the normal reading failed to hit 0.3% as forecast, remaining at 0.2%, while the core number unexpectedly slipped to 0.1% – cast a smidge of doubt on a September hike from the Federal Reserve. And thought it likely won’t dissuade Jerome Powell and his FOMC pals from raising rates in a fortnight, continued softness may well impact its long-term guidance.
Regardless, the dollar took great umbrage with the data. Against the pound it fell 0.4, sending cable above $1.31 for the first time since the start of August, while against the euro the greenback dropped half a percent, with the single currency now knocking at the door of $1.17. Seemingly in reaction to the dollar’s dour afternoon – alongside relief that Turkey took steps to curb the lira crisis – the Dow Jones shot up by 190 points, hitting a 26200-teasing 7 and a half month high.
Things were more mixed in Europe. While the DAX jumped 40 points, allowing it to near 12100, the FTSE couldn’t get out of the red, ducking back under 7300 in light of cable’s gains and the losses incurred by BP (LON:BP) and Shell (LON:RDSa).
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