ECB set to hike rates to highest level in over a decade. US stocks advance over suggestions of Fed pivot following Bank of Canada decision
October 27, 2022
GBP/USD 1.1595 GBP/EUR 1.1522 EUR/USD 1.0064 USD/CAD 1.3584 EUR/CHF 0.9934 EUR/SEK 10.9397 EUR/NOK 10.3135 EUR/DKK 7.4380 USD/ILS 3.5087 AUD/USD 0.6471 NZD/USD 0.5834 USD/SGD 1.4064 USD/JPY 145.71 USD/CNH 7.2427 USD/INR 82.3275 EUR/ILS 3.5310 GBP/ILS 4.0683 USD/ZAR 17.9903
The latest headwind facing hurting British businesses arises from higher borrowing costs. About half of small and medium-sized business said the pricing of loans was “poor” in the three months through September. This is the lowest in seven years, as businesses warn the cost of credit has more than doubled in over 12 months.
According to estimates, UK mortgage lending may be headed for its biggest plunge in over a decade, following a year which has seen a surge in interest rates and a cost-of-living squeeze that has strained households
GBPUSD trades 3.43% higher on the week, following perception that fiscal responsibility has been restored by the change in leadership.EUR
The European Central Bank is set to look past intensifying recession fears by lifting its main interest rate to the highest level in more than a decade as it aims to tackle euro-zone inflation. Despite some unsatisfaction from EU leaders, expectations see the ECB hiking rates by 75-bps later today.
The driving motivation behind the Governing Council is that inflation, almost five times above the ECB’s target. The necessity of tackling inflation is taking precedence over the need to shield the economy from a recession this winter.USD
Stocks advanced yesterday, as central banks provide some optimistic signals that less aggressive monetary tightening could be on the horizon. The Bank of Canada raised interest rates by a smaller amount than expected on Wednesday, 50-bps, compared to the forecasted 75-bps. This only adds to suggestions that a similar downshift could be seen by the Federal Reserve in December. However, Markets still heavily expect 75-bps of tightening at the November meeting.
Contractions in the services and manufacturing sectors (PMIs) showed that the Fed’s efforts to cool the economy appear to be having an impact. This in unlikely to alter the Fed’s policy as there are not currently convincing signs that inflation is subsiding. US GDP for the third quarter is expected today and is expected to signal growth of 2.4% after a brief contraction of -0.6% last quarter.ASIA/PACIFIC
Xi Jinping has said China is willing to work with the US to find new ways to cooperate. He cited that enhanced communication between the countries could help bolster global peace and development.
South Korea’s GDP rose 0.3% in the three months through September, meanwhile Australia’s export price index fell 3.6% in the same period.ILS
Israel’s trade deficit narrowed to $3.1 billion in September from $3.23 billion in August. USDILS trade 0.15% intraday.Data & Events
Italy Oct. Confidence/Economic Sentiment
ECB Rate Decision
US 3Q GDP
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