ECB targets gradual policy tightening

Today's news headlines:

‘UK housing market starts to slow as more sellers cut prices’. The red-hot property market in the UK is starting to show signs of slowing, with 1 in 20 homes having their asking price cut by 9% on average, according to Zoopla. Rising inflation and the cost of living crisis are starting to impact demand among buyers following a peak in the average price of a home of £278,000 in March. London property is also staging a partial turnaround as workers return to the office and the need for a larger working space at home falls. (Financial Times)

‘ECB’s Lane calls two quarter-point rate hikes “benchmark pace”’. Gradual is the word that will best describe the path of tightening monetary policy, according to European Central Bank Chief Economist Philip Lane. Echoing the opinions of ECB President Christine Lagarde, Lane has voiced his support for two 25 basis-point hikes in the July and September meetings, with major drivers needed to increase by larger increments such as 50 basis points. (Bloomberg)


Today

Asian markets moved higher overnight as Coronavirus restrictions are eased in Shanghai and Beijing. This follows a US market rally on Friday as the core Personal Consumption Expenditures (PCE) price index showed signs of slowing in April. Oil prices have gained this morning while European shares open in the green.

Events

German Import Prices m/m: 1.8% (est. 2.1%)
Spanish flash Consumer Price Index y/y: 8.7% (est. 8.4%)
US Federal Open Market Committee member Christopher Waller speaks: 4:00PM
US Bank Holiday: All day


Interbank rates:

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GBP/USD – 1.2627
GBP/EUR – 1.1747
EUR/USD – 1.0749
USD/CAD – 1.2694

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