ECB expected to downshift to 0.5% next week, US dollar could depreciate in the medium term as Fed pivots, RBI lifts rates by 0.35%
December 8, 2022
GBP/USD 1.2169 GBP/EUR 1.1581 EUR/USD 1.0508 USD/CAD 1.3679 EUR/CHF 0.9889 EUR/SEK 10.9229 EUR/NOK 10.5326 EUR/DKK 7.4378 USD/ILS 3.4406 AUD/USD 0.6717 NZD/USD 0.6350 USD/SGD 1.3575 USD/JPY 137.03 USD/CNH 6.9709 USD/INR 82.4450 EUR/ILS 3.6151 GBP/ILS 4.1866 USD/ZAR 17.1924
Britain’s labour market cooled noticeably last month with demand for staff and pay growth easing, staff shortages became less acute. The monthly index of demand for staff from the REC fell from 56.7 and 54.7. According to Clearpay, roughly 2/5 of Britons are using ‘buy now pay later’ schemes to finance their spending over the holiday season.EUR
In a weeks’ time the ECB will meet for the final time in 2022, with a slew of important decisions to make with interest rates likely being the least contentious. The ECB is expected to downshift to a 0.5% hike, from a 0.75% hike the previous month. Markets are uncertain about the governing council’s announcement on quantitative tightening. Lagarde confirmed the intention to reduce the bond holdings and will layout its plan at the December meeting.
The economic outlook for the euro-area is deteriorating as higher borrowing costs begin to bite. Bloomberg economics expects GDP to shrink by 0.4% in the final quarter of this year, this decline is also seen continuing into the first three months of 2023. The latest PMI reading suggest that a contraction is already underway.USD
The greenbacks attraction as a safe-haven and for relatively high US yields will decline as the Federal Reserve’s rate hike cycle ends, and it pivots to cutting rates. The exact timing is still an uncertainty, and heavily dependent on central banks and their policy paths.
US Consumer borrowing rose by $27.1 billion in October, which is less than initially forecasted. US Jobless claims are expected to inch up to 230,000 from 225,000.ASIA/PACIFIC
High frequency data suggest that higher infections are taking their toll on China’s economy. New cases of covid are at record high, subway use fell 54% from pre-pandemic levels. The number of online searches for “unemployment” has registered at more than 30% the pre-pandemic level.
The Reserve Bank of India lifted the repo rate to 6.25%, an increase of 0.35%. The hike was smaller than the 0.5% hikes delivered in the three meetings prior.ILS
USDILS trades slightly higher intraday 0.1% above yesterday. The cross has returned above 3.4 after briefly dipping below last week.Data & Events
ECB Lagarde speaks
Trading in financial instruments may involve a high degree of risk and may not be suitable for all investors. Trading in financial instruments can result in both loss and profit. Investors should carefully consider whether financial instruments suit their needs, financial resources and personal circumstances.
The information contained in this material is solely for informational purposes only and it is not and should not be construed as an offer or a solicitation of an offer to buy or sell any financial instruments and cannot be relied upon as a representation that any particular transaction necessarily could have been or can be effected at the stated prices. This material does not contrue advice.
For more analysis on FX markets or information regarding SVB's FX services:
0800 023 1440 from within the UK
+44 207 367 7880 from overseas
See all of SVB's latest FX information and commentary.
© 2023 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB).
Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department of Business Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Silicon Valley Bank is a subsidiary of SVB Financial Group, a Delaware corporation and is an affiliate of SVB Financial Group UK Limited. SVB Financial Group UK Ltd is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. 5572575 and is authorised and regulated by the Financial Conduct Authority, with reference number 446159. SVB Financial Group and its subsidiary Silicon Valley Bank are members of the Federal Reserve System and Silicon Valley Bank is a member of the FDIC.
Your eligible deposits with Silicon Valley Bank UK are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered. Please click here for further information or visit http://www.fscs.org.uk. For more detailed information about coverage and limits, please review our FSCS Information Sheet at http://www.fscs.org.uk.
This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources. Opinions expressed are our opinions as of the date of this content only. The material is based upon information which we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such.