June housing market data were released on Friday. Housing starts increased by 19.0% to 1.427 million, while the number of building permits issued by the authorities fell by 3.0% to 1.367 million. In addition, industrial production rose by 0.1% month-on-month, missing the forecast of 0.2%, while annual growth slowed from 1.58% to 1.14%. Investors are closely following comments from US Federal Reserve officials. Cleveland Fed President Beth Hammack said that inflation remains too high and that businesses expect the Federal Open Market Committee (FOMC) to take measures to address it. Dallas Fed President Lorie Logan added that the current situation requires a modest increase in interest rates. Against this backdrop, the probability of monetary policy tightening in December has risen to 82.0%, according to the CME FedWatch Tool.

Eurozone

The Euro is weakening against the Pound and the Yen but showing mixed performance against the US Dollar.

Wholesale inflation data were released today in Germany, the largest economy in the European Union. The producer price index declined from 0.3% to –0.3% month-on-month, exceeding expectations of –0.2%, while annual growth slowed from 2.2% to 1.8%, falling below the European Central Bank’s 2.0% target. Overall, inflationary indicators across the Eurozone continue to ease. However, analysts are concerned that renewed hostilities in the Middle East could intensify the energy crisis and push oil prices higher, potentially forcing the regulator to tighten monetary policy towards the end of the year. According to an ECB survey of European companies, businesses expect selling prices to rise by a more moderate 3.2% over the next twelve months, compared with the previously projected 3.5%, while wage growth expectations declined from 2.8% to 2.5%.

United Kingdom

The Pound is strengthening against the Euro but showing mixed performance against the Yen and the US Dollar.

Former Manchester Mayor and Labour Party representative Andy Burnham officially took office as Prime Minister today, replacing Keir Starmer. In his first address from Downing Street, Burnham said that his predecessors had failed to provide the stability needed to improve living standards and pledged to change the situation. Investors, however, are more focused on whether the new Prime Minister will fulfil his promises to maintain fiscal discipline and avoid increasing government spending and public debt. July house price data from Rightmove Group Ltd. were also released. Prices fell by 1.0% month-on-month after declining by 0.6% previously and decreased by 0.4% year-on-year. Analysts attributed the weakness to hot weather, which prompted consumers to postpone purchases, as well as continued pressure from high inflation.

Japan

The Yen is strengthening against the Euro and the US Dollar but showing mixed performance against the Pound.

Japan is observing a public holiday today, leaving financial institutions closed and reducing investor activity. June inflation data will be released on Friday at 01:30 GMT+2. The nationwide consumer price index is expected to remain at 1.5% year-on-year, while the core measure may accelerate from 1.4% to 1.6%. A result in line with expectations would confirm stronger inflationary pressure and increase the likelihood of further monetary policy tightening by the Bank of Japan.

Australia

The Australian Dollar is strengthening against the Euro, Yen, Pound and US Dollar.

June labour market data will be released on Thursday at 03:30 GMT+2 and could significantly influence the Reserve Bank of Australia’s next policy decisions. The unemployment rate is expected to remain unchanged at 4.4%, while employment growth may slow from 40.3 thousand to 15.2 thousand. Overall, the labour market remains stable, which, combined with elevated inflation — the first-quarter consumer price index stood at 4.1%, while trimmed mean inflation reached 3.5% year-on-year — could allow the regulator to continue tightening monetary policy.

Oil

An initial decline in oil prices has been followed by renewed growth.

The market is currently being influenced by two opposing factors. On the one hand, prices are under pressure from recent comments by Iranian Foreign Ministry spokesperson Esmail Baghaei, who said that negotiations with the United States could continue despite the ongoing hostilities, provided Iran’s national interests are respected. He also confirmed that intermediaries remain in contact with both sides. On the other hand, further price declines are being limited by the Yemeni Houthis’ announcement of a blockade of the Bab el-Mandeb Strait, which could significantly disrupt energy supplies. Approximately 4.19 million barrels of Saudi crude oil pass through this maritime route each day.