Fed hikes by 0.5%, rolling off the balance sheet; BoE expected to raise rates by 0.25%. Stocks climb as Powell downplays 0.75% hike.
May 5, 2022
GBP/USD 1.2543 GBP/EUR 1.1834 EUR/USD 1.0600 USD/CAD 1.2750 EUR/CHF 1.0351 EUR/SEK 10.3351 EUR/NOK 9.8059 EUR/DKK 7.4411 USD/ILS 3.3781 AUD/USD 0.7226 NZD/USD 0.6517 USD/SGD 1.3777 USD/JPY 129.68 USD/CNH 6.6463 USD/INR 76.2150 EUR/ILS 3.5806 GBP/ILS 4.2371 USD/ZAR 15.5874
The Bank of England is expected to see rates rise to 13-year highs and clarify its plans to sell some of its £847 billion in government bond holdings. Swaps are pricing in 1.25% of further hikes by September.
GBPUSD trades lower -0.88% intraday, the FTSE100 has opened +1.45%, and despite the cost-of-living crisis, has outperformed European equities, up 3% YTD.EUR
The ECBs Fabio Panetta has stated that the European economy is de facto stagnating. Growth in the first quarter would have been zero without on-off growth spikes in a handful of nations.
Germany’s factory orders fell 4.7% MoM in March, a much steeper drop than forecasted, as Ukraine and a new Chinese covid wave triggers supply chain issues.
Spain and Portugal begin collaboration to cap the prices of natural gas used on the Iberian Peninsula.USD
The Federal Reserve raised rates by 0.5% as expected and hinted at a series of same-sized moves to come. Jerome Powell eased concerns around a 0.75% hike. The Fed will allow Treasuries and MBS to roll-off in June at an initial monthly pace of $47.5 billion.
The DXY is 0.2% higher as we print. US equities closed higher following Powell’s comments downplaying the likelihood of radical tightening.ASIA/PACIFIC
Biden’s strategy towards China is set to be outlined today. The address was delayed, and it is expected not to offer any major changes in US foreign policy.
The Yen could extend declines to 140 per dollar, by a fresh surge in Treasury yields.ILSUSDILS touched 3.39 yesterday, the last 24 hours has seen high volatility for the cross, trading between 3.35 and 3.39Data & Events
BoE Rate Decision
US Weekly Jobless Claims
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