Euro-Area CPI fell again in December, Yen continued gains against the dollar as it rebounds from early losses, Fed receives disinflationary signal from PPI release.
January 19, 2023
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 1.2336 GBP/EUR 1.1396 EUR/USD 1.0826 USD/CAD 1.3513 EUR/CHF 0.9917 EUR/SEK 11.1044 EUR/NOK 10.7323 EUR/DKK 7.4407 USD/ILS 3.3947 AUD/USD 0.6885 NZD/USD 0.6386 USD/SGD 1.3253 USD/JPY 128.30 USD/CNH 6.7868 USD/INR 81.3713 EUR/ILS 3.6749 GBP/ILS 4.1877 USD/ZAR 17.2378
Sterling gained throughout yesterday following the second month of reduction from the 41-year high, reaching highs of 1.2436 late London session before retreating into this morning to trade around the 1.2340 level as we print. GBPUSD trades up 1.13% this week.
The ONS reports that UK house prices pulled back from their record level in November, with the average home costing £295,000 in November, down a £1,000 MoM before but down £28,000 more than a year ago. Back-to-back hikes from the BOE at its last nine meetings, have increased the cost of mortgages for thousands of homeowners. Halifax Nationwide Building Society is predicting a 8% fall in house prices this year, while Nationwide Building Society predicts 5%.EUR
As expected, headline inflation in the Euro area has continued to fall, printing at 9.2% in December against 10.1% the previous month, assisted by a fast decline in energy prices. Despite the downward trend, the core reading seems to be proving harder to tackle, with the print ticking slightly higher in line with expectations at 5.2%.
EURUSD fluctuated throughout the day, reversing daily gains to lose just under 1% following US open. The pair traded back below the 1.0800 figure, as several redundancy announcements from large US corporates fueled speculation of a recession, driving investment into the safe-haven dollar.
The euro has regained some momentum this morning, gaining 0.25% as investors await Christine Lagarde’s speech and release of December’s ECB meeting minutes later today.USD
The Federal Reserves latest Beige Book reflects uncertainty about whether policy makers can engineer a soft landing. Consumer spending was mixed with American’s showing greater price sensitivity. Interest related purchases such as automobiles were flat, whilst housing-related items continued to weaken. As consumer demand weakens, the US got another sign of disinflation in the Producer Price Index. Goods disinflation in 1H 2023 could drive headline CPI as low as 2.6% by June.ASIA/PACIFIC
The Yen was the biggest gainer against the US Dollar yesterday, rebounding from early losses following increased speculation that the Bank of Japan will soon have to move away from existing monetary policy. The pair trade 1.5% down on yesterdays high at time of writing. Japan’s trade deficit defied expectations, falling below two trillion Yen for the first time in five months, as the impact on high energy costs and a weak currency seemed to soften. Investors will be paying close attention to the countries inflation print, released during the early hours.
Equities and FX broadly declined on recession worries, with the MSCI APAC Index down 0.4% and the onshore Yuan down 0.56% throughout the Asian session.ILS
USDILS recovered yesterday from session lows of 3.3640, as it now trades nearer 3.4.Data & Events
ECB’s Lagarde speaks at WEF
ECB Monetary Policy Meeting Minutes
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