Dollar correction as risk-on sentiment builds, Inflation data could give Fed mixed signals, UK economy could plunge into recession from excess bank holidays, Natural gas prices fall ahead of EU intervention.
September 12, 2022
GBP/USD 1.1680 GBP/EUR 1.1478 EUR/USD 1.0176 USD/CAD 1.2988 EUR/CHF 0.9721 EUR/SEK 10.6644 EUR/NOK 9.9874 EUR/DKK 7.4366 USD/ILS 3.3905 AUD/USD 0.6879 NZD/USD 0.6148 USD/SGD 1.3959 USD/JPY 6.9249 USD/CNH 6.9249 USD/INR 79.5688 EUR/ILS 3.4502 GBP/ILS 3.9599 USD/ZAR 17.1710
The UK economy has recovered slower than expected from a slump caused by an additional bank holiday in June. Growth in July printed at 0.2% monthly, missing estimates of 0.3%. The death of HM Queen Elizabeth II, and the bank holiday next Monday, could tip the UK into recession through the next quarter.
GBPUSD trades 0.80% higher this morning, despite weaker GDP figures, as markets awake to global dollar weakness.EUR
France sent an emergency energy alert to the UK and Spain over the weekend, after a trading error jeopardised French Supplies. The error oversold huge amounts of electricity over a two-day period.
Natural gas prices fell as the market awaits details of unprecedented intervention by the European Union to halt its biggest energy crisis in decades. Benchmark futures have declined 6.8%, however prices remain eight time higher than normal for this time of year.
The EURUSD trades 1.5% higher intraday, following dollar weakness as risk-on sentiment builds.USD
US CPI prints tomorrow with inflation expected to moderate. Consensus sees an 8.0% YoY rise, down from 8.5% the prior month. This release along with the Fed’s preferred PCE deflator will might impact Fed policy through September, despite Powell’s commitment to a hawkish policy path. A large downside miss could knock the Fed off course, and hence weaken the dollar. Nonetheless markets currently are leaning heavily towards 75-bps of hikes in September.
Ukraine’s successful counter-offensive suggest momentum might be turning following Russian retreats in the North-west part of the country. The changing narrative of the war could impact the markets’ reaction, at the time of the invasion the Vix index of volatility stood above 36, currently it is now at 22.ASIA/PACIFIC
The Biden administration is expected to broaden curbs on US shipments of semiconductors to China following heightened tensions since Pelosi’s visit to Taiwan.
China’s Xi Jinping is set to make his first trip abroad since covidILS
USDILS trades 0.6% lower as the greenback sheds strength. Israel’s consumer confidence rose to 78 in August from 61 in July.Data & Events
Italy Industrial Production
Germany Current Account
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