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The single currency is on a free fall. The bearish performance came following President Christine Lagarde’s latest speech and mixed economic data from the currency bloc. The European Central Bank chief said that short-term inflation would not trigger the ECB to raise rates. The Eurozone will unveil its September consumer price index (CPI) on October 01 and forecasts suggest a 3.3% increase. If the inflation surged in line with the estimates, the CPI would reach a 13-year high just like in the US. The Federal Reserve’s response is to buy assets at a slower pace starting November and fast-forward a rate hike to 2022. The Consumer Inflation Expectations index supported the soaring inflation forecasts with a 2.0 points jump to 33.1 points. Also, the Consumer Confidence index rose to -4.0 points. Meanwhile, the benchmark for Services Sentiment fell to 15.1 points. On the other hand, the Industrial Sentiment’s 14.1 points result beat the consensus of 12.5 points.
The market will pull out their investments from Japan following the LDP election win of Fumio Kishida. The next prime minister of Japan criticized the central bank’s ultra-loose monetary policy in 2018. He changed his stance in 2020 when the pandemic hit. Kishida plans to ensure inclusive growth once he is seated, the opposite of ‘Abenomics,’ which supports corporate Japan. In terms of security and diplomacy, the PM-elect wants to boost US cooperation. The policy could put the economy in trouble against China. Kishida’s win is a surprise as the market expects Kono to win the leadership. On the economic front, Japan showed slowing activities. The August Coincident Indicator extended July’s decline with a -0.2% result. The report measures the current economic conditions. On the other hand, the forward-looking Leading Index inched lower to 104.1 points from the revised 104.3 points previously. Analysts expect the rally to continue towards 115.000.
Fraser Institute said that Canada’s economy lags against its peers. In addition, the think-tank said that the current economic conditions are not favourable for investment and emerging companies. In relation, the country will release its July GDP data on October 01. Analysts expect the result to come at -0.2% from the previous month’s 0.7% expansion. The contraction could extend in the coming months as the fourth wave of the pandemic starts in August. In support, Canada’s central bank reaffirmed to keep the interest at a record low of 0.25% until 2023. In other news, the newly elected Prime Minister Justin Trudeau promised to boost the post-pandemic economy. However, Trudeau might struggle passing new economic measures as his party failed to gain the 170 seats majority. On the other hand, S&P Global Ratings commended New Zealand’s effort to contain the pandemic. The rating agency revised NZ’s GDP fiscal 2021 upwards by 80 basis points to 5.4%.
The energy crisis in the United Kingdom will continue to weigh down on the British pound in the coming sessions. Brent crude topped 80.00 per barrel on Tuesday as labor shortages created delay in shipments. The UK government anticipates around 100,000 drivers are urgently in need. Some analysts partly blamed Brexit for the labor crisis. The lack of free movement across member states has pulled essential workers out of the United Kingdom. As for the economic report, the recent data suggests tighter approvals but for loans. In August, the approved mortgage loans were 74,450. The figure beat estimates of 73,000. However, data missed 68,000 to be at par with July’s record. Meanwhile, the amount lent increased to 5.29 billion compared to a decline of -1.76 billion in the previous month. Also, net lending to individuals jumped to 5.60 billion. Also, August’s liquidity is higher by 0.5% based on the M4 Money Supply. In the previous month, the record was 0.1%.