INDIA: RBI Minutes Shed Light on Discussions Over Central Bank Stance

ECB Schnabel's slides presented at the EIB's Chief Economist's meeting are here

Key messages are well in line with Schnabel's previous comments:

• "Interest rates are in a good place as inflation stabilises around our 2% target and the economy remains resilient at full employment"
• "Healthy balance sheets, lower uncertainty and fiscal expansion underpin domestic demand, counteracting a decline in net exports"
• "So far little evidence of China dumping exports, while the pass-through of a stronger exchange rate is likely to be limited"
• "Upside risks to inflation dominate, with tariffs, services inflation, food inflation and fiscal policy as potential drivers"
• "Monetary policy should keep a steady hand, tolerating moderate deviations from target"

• Bullish conditions for GBPUSD have been bolstered this morning, following the break of the bull trigger located at 1.3595 (Aug 14 high) which places the pair at two-month highs. The rally that started Sep 3 has retraced the steep Sep 2 sell-off, suggesting the corrective cycle between Aug 14 - Sep 3 is over. Immediate resistance is found at 1.3636, the 76.4% retracement of the Jul 1 - Aug 1 downleg, before 1.3681, the Jul 4 high.
• ING comment that the travails of the UK Labour government have not dented appetites for the high-yielding pound. They think EURGBP looks comfortable in its 0.86-0.87 range, while GBPUSD could break above resistance at 1.3590/3600 this week if the Fed is sufficiently dovish.
• Official labour market data headlines Tuesday’s calendar, expected to continue to show mixed signals. 3m/3m employment is expected to increase by over 200k again in the 3-months to July while the flash monthly payrolls print is expected to modestly decline by around 11k in August.
• UK CPI data and the BOE decision also take place this week, placing a heightened amount of attention on sterling this week.

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