Dear Reader,

Today's overview of economic news and market action

• The cautious mood on markets persisted yesterday …
• Currency-wise, the yen was in the ascendancy as authorities confirmed they intervened to support the yen …
• However, the Japanese currency was unable to hold onto all of its gains …
• In level terms, EUR/JPY is operating in the lower half of ¥169-170 …
• EUR/USD is back below the $1.09 threshold …
• GBP/USD is in the top half of the $1.27-1.28 band …
• EUR/GBP remains below the midpoint of 85-86p …
• Today, the main data highlight will be the US non-manufacturing ISM for May …

Sticky inflation won’t alter ECB June rate decision

Inflation data across the Eurozone printed slightly higher than expected in May, but are unlikely to alter the ECB’s monetary policy decision on Thursday. As signalled by earlier releases from Spain and Germany, the Eurozone inflation data came in at a slightly higher rate than forecast in May.

• Irish growth expected to continue at a more moderate pace than recent years, as the economy nears full capacity.
• Labour market to continue to grow and employment to reach 2.8 million by 2026.
• Central bank interest rate decreases will support real economy in the coming years.
• Real wages to rise as inflation normalises.
• Key trading partners’ performance provides a steady backdrop for the Irish economy.
• Theme in Focus: The outlook for interest rates.

World economy continues to exhibit resilience. However, subdued growth expected again in 2024, with US outperformance starting to wane, UK and Eurozone accelerating. Inflation remains sticky in key markets, particularly the US and UK, with consumer spending underpinning high core inflation, and higher oil prices a renewed inflationary risk.