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
Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.
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
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