Inevitable disappointment

Today’s news headlines:

‘Fed fleshes out new monetary policy — to mixed reviews’. Last night, the Federal Reserve’s press conference delivered pretty much as expected, but it was a disappointment for those wanting the Federal Open Market Committee to take a more aggressive tack in driving inflation higher. What Chair Powell said was that the Fed’s decision-makers would keep rates on hold until inflation was beyond the 2% target for some time, but said nothing about using the bank's arsenal of tools to drive it there. (Financial Times)

‘Johnson backs down in row over internal market bill’. If you thought the Internal Market bill story was complicated to this point, it only gets stranger. The Prime Minister has offered a compromise to rebelling Tories on the offending section of the bill, limiting its authority by subsequent House of Commons approval. Richard Keen, the advocate-general of Scotland, resigned, and is just the newest legal council to leave the government this week. Johnson’s proposal has not shifted the EU objections one iota, because they contend that breaking the law is breaking the law regardless if done by fiat or governmental vote. (Financial Times)

Today's events, rates, and data 

• Yesterday was a second session of Sterling gains over the Euro with the Dollar holding pat. Given how we have witnessed the Chinese economy rebounding out of Covid, it's reassuring to see the overnight employment gains in Australia reinforcing that recovery. The FOMC announcement was underwhelming, so the focus now shifts to the Bank of England this afternoon. Again, the expectation is minimal, given that the Monetary Policy Committee is already employing considerable measures to loosen conditions. It's worth noting that further trade-weighted Sterling appreciation may be restrained by the 100-day moving average, where we find ourselves this morning.

Today's events

AU  Employment Change: 111.0k vs 119.2k last month
AU  Unemployment Rate: 6.8% vs 7.5% last month
UK  Bank of England policy summary: 11:00 AM
CA  ADP Non-Farm Employment Change: 12:30 PM
US  Philly Fed Manufacturing Index: 12:30 PM
US  Unemployment Claims: 12:30 PM   

Interbank rates:

GBP/USD – 1.2955
GBP/EUR – 1.0990
EUR/USD – 1.1785
USD/CAD – 1.3215