Jobs report and services hint at end to Fed tightening cycle, Earnings hint at strong spending during festive period, Core CPI to remain focus of ECB.
January 9, 2023
GBP/USD 1.2154 GBP/EUR 1.1392 EUR/USD 1.0669 USD/CAD 1.3395 EUR/CHF 0.9865 EUR/SEK 11.1847 EUR/NOK 10.6073 EUR/DKK 7.4377 USD/ILS 3.5120 AUD/USD 0.6923 NZD/USD 0.6388 USD/SGD 1.3330 USD/JPY 132.41 USD/CNH 6.7928 USD/INR 82.3895 EUR/ILS 3.7467 GBP/ILS 4.2681 USD/ZAR 17.0710
The UK emerges from a Christmas period of widespread industrial action, with any respite likely temporary with unions balloting yet again. Some earnings reports suggest that the disruption and inflation did not stifle the festive spirit of British consumers, as Next and B&M saw stronger than expected reports.
The UK housing market could be set for even more volatility. More than a third of buy-to-let fixed rate mortgages are due to end in the next two years. The fallout of these expiries could spike rents across the nation, with landlords becoming increasing exposed to rising mortgage rates.EUR
Last week’s Euro-area CPI plunged last month, falling to 9.2% in December. The large drop was driven by a sharp drop in energy contributions, with energy bills substantially lowered by support measures put in place by the German government. Hidden behind the collapse in the headline figure core inflation advanced further to 5.2%, beating expectations. The ECB’s governing council is likely to take little relief from last months print, as they remain focused on developments in core inflation and underlying price pressures.USD
The stock rally following Decembers Job’s and ISM services print highlights that inflation is still driving markets in the early days of 2023. Markets homed in on the moderation in average hourly earnings from the jobs report, which they believe will allow the Fed to end its tightening cycle. Consequently, the collapse in the ISM services gauge shows that the rapid rates hike of 2022 are beginning to weigh on the economy.ASIA/PACIFIC
High-frequency data suggest that the worst of the Chinese covid surge may be over. Cases soared in China as Beijing ended its Covid-zero restrictions. The number of travellers increased significantly over Christmas, highlighting that the population is back on the move.
Guo Shuqing, PBOC party secretary, has told the press that China’s economic growth will return quickly to its normal path, as the government steps up support measures for households and private firms.ILS
USDILS continues to trade above 3.5 as it has done through much of the Christmas period. It has slipped away from highs above 3.55 seen on Friday.Data & Events
Italy Nov. Unemployment
Euro-Area Nov. Unemployment
Ireland Nov. Industrial Production.
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