Fed hikes by 0.75%, signals downshift next month. Powell says FOMC see terminal rate higher than previously expected. Bank of England set to deliver its biggest interest rate decision in 33 years.
November 3, 2022
GBP/USD 1.1261 GBP/EUR 1.1541 EUR/USD 0.9757 USD/CAD 1.3762 EUR/CHF 0.9874 EUR/SEK 10.9216 EUR/NOK 10.3286 EUR/DKK 7.4426 USD/ILS 3.5693 AUD/USD 0.6309 NZD/USD 0.5776 USD/SGD 1.4211 USD/JPY 148.17 USD/CNH 7.3449 USD/INR 82.9163 EUR/ILS 3.4826 GBP/ILS 4.0192 USD/ZAR 18.3819
The Bank of England is expected to deliver its biggest interest rate decision in 33 years, stepping up an effort to rein in double-digit inflation. Over the last two months, the expectations for this meeting have been very volatile. During the worst of the bond-market turmoil, an emergency rate hike was being discussed with almost 2% of tightening priced in. Markets currently expected at 0.75% hike from today’s meeting. GBPUSD trades 1% lower ahead of the BoE’s meeting later today driven primarily by USD strength.EUR
Governing council member, Kazaks, has said that the ECB must lift borrowing costs “significantly” to tackle a record surge in prices. He told Latvian TV that interest rates will still rise “significantly” but understood that uncertainty over the next year remains high primarily due to the war in Ukraine.USD
The Federal Reserve matched expectations by hiking 0.75% once again. Despite signalling to the market that the pace of tightening could slow in December, he was quick to confirm that the Fed is prepared to push terminal rates higher. He states that “the ultimate level of interest rates would be higher than previously expected”. This move brings rates to the 3.75-4% range, a level which the US economy has been remarkably resilient too. The dollar is 1.22% stronger as we print, following the announcement that the terminal rate will be higher than expected.ASIA/PACIFIC
Hong Kong raised its benchmark borrowing rate by 0.75% to 4.25%. The Philippine central bank governor has said it will also hike by 0.75% at its Nov. 17 meeting, as central banks globally look to keep pace with the Federal Reserve.
China’s Caixin services PMI fell more than expected to 48.4 in October.ILS
With 90.7% of votes from Tuesday’s election counted, Mr Netanyahu’s bloc is set to win 65 out of 120 seats, returning the former Prime Minister to Power. USDILS trades 0.5% higher intraday, following the fallout out of a stronger dollar from yesterday’s Fed decision.Data & Events
UK Composite PMI
Euro-Area Sept. Unemployment
BoE Rate Decision
US Sept Trade Balance, Weekly Jobless Claims
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