Yesterday we saw US PPI (producer price inflation) reach 0.7%, its highest level in 7 months. We also had four speeches from Federal Reserve members commeting on the economic outlook for the US.
Main topic was the view on inflation, unemployment and economic output. In recent weeks there has been speculations about a Fed policy pivot in the upcoming months.
From yesterday speeches and data, suggestions is that the policy pivot has been pushed back and that there is still required action for additional monetary policies. This boosted the greenback furthermore. Currently (while writing) EUR/USD 1.0635 and GBP/USD 1.1925.
An additional contribution to the recent dollar strength is the policital confrontations between the US and China regarding spy-activities, that has created a risk-on environment and boosted the safe haven currency. (Maybe don’t include this line?)
Onto today, this morning british retail sales were released for January 2023, surprisingly increasing by 0.5% compare to the following month in December 2022. Main contribution to the increase was fuel consumption that grew the most, after a reduction in oil prices. There was also an improvement for online retails, through January sales.
UK is on a path to recession and even if retail sales did increase compared to last month, these figures are down 1.4% compared to January pre covid. In reality, the figures for month-on-month did improve from a the previous month (December showed -1.0%) but the overall view is that retail sales in the long-run perspective is decreasing.
