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Frankfurt in the spotlight


Earlier in the week, sterling briefly touched its highest level against the euro for almost two years but has since drifted lower and has traded sideways against the dollar. This price action continued after Chancellor Rishi Sunak’s budget, as expected, failed to deliver any major shocks. Most notably, the Chancellor announced that he had written to the Bank of England reaffirming their remit to keep inflation low and, in doing so, gave them the green light for a rise in base rate next week. The Chancellor managed to please beer and cider drinkers whilst disappointing those who prefer a stiffer tipple by changing the way drinks are taxed from 2023.

A quiet day ahead on the data docket will leave traders concentrating on the European Central Bank meeting and the approaching portfolio squaring associated with month-end.


Eyes and ears will be focused on Christine Lagarde’s press conference at 13.30 this afternoon, following the European Central Bank’s meeting and policy statement. After the September meeting, the ECB decided to reduce the pace of asset purchases under the Pandemic Emergency Purchase Programme. Since then, Europe has suffered from rising energy prices, increasing inflationary pressures, which have raised hawkish expectations.

However, the hawks may be in for a disappointing afternoon as the most likely outcome is a neutral stance.

Without any fresh impetus from the ECB, the euro will remain vulnerable from its hawkish cousins, the dollar and the pound. There are also some confidence surveys released today and the German Consumer Price Index, but the ECB meeting will overshadow these.


The dollar has opened virtually unchanged this morning after a day of sideways trading. Unusually the US will be a supporting act to the action taking place elsewhere today as Frankfurt takes centre stage. Whilst Christine Lagarde is holding her press conference at 13.30 this afternoon, the weekly jobless total will be released, and with the Federal Reserve meeting next week to discuss policy tightening, amongst other matters, the dollar may be more sensitive than normal.

Apart from that, Preliminary Personal Consumption data is released, but with the more relevant monthly series released tomorrow, they are likely to be ignored.

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