Lagarde says central banks need to restore confidence, Job growth seen in decline amid higher interest rates, Sunak sees defeat in first by-election.
December 2, 2022
GBP/USD 1.2282 GBP/EUR 1.1656 EUR/USD 1.0538 USD/CAD 1.3438 EUR/CHF 0.9849 EUR/SEK 10.8667 EUR/NOK 10.2582 EUR/DKK 7.4372 USD/ILS 3.3778 AUD/USD 0.6826 NZD/USD 0.6403 USD/SGD 1.3498 USD/JPY 133.82 USD/CNH 7.0266 USD/INR 81.2488 EUR/ILS 3.5594 GBP/ILS 4.1486 USD/ZAR 17.4692
Confidence in UK market remain fragile, after the former chancellor’s fiscal statement triggered a gilt crisis. This has heavily weighed on the property market. UK home prices fell for the fastest pace in more than two years, with borrowers notably vulnerable amid high interest rates.
The Bank of England’s Decision Maker Panel Survey signalled that price pressures are easing. This will embolden the doves at the Bank of England that are pushing for smaller hikes in the coming months.
In the political theatre, Sunak’s conservatives saw a 12% swing to labour in the first by-election of his premiership, highlighting the damage inflicted to the conservative’s majority over the last 3 years.EUR
ECB President Christine Lagarde said the inflation expectations need to remain anchored and that the public needs to know that price gains will be brought back to target. All eyes are on the ECB’s final 2022 meeting where they will decide whether to deliver a third straight interest-rate hike or 0.75% or to moderate to 0.5%. Earlier this week, Lagarde said that she’d be surprised if price growth had peaked somewhat reinforcing the narrative for a hawkish move in December.USD
US manufacturing PMI held at 47.7, marginally above expectation, however, still points to an industry in decline. Initial Jobless Claims printed at 225,000, lower than the expected 235,000. This continues to highlight the underlying strength in the jobs sector. All eyes now turn to the monthly Nonfarm Payrolls, the consensus is that there will be a decline to 200,000 from 261,000 the month prior. The unemployment rate is anticipated to hold at 3.7%. The Fed’s decision to downshift may be reflected in the employment data, as it shows the higher rate conditions weighing on employers.ASIA/PACIFIC
November’s Caixin PMI survey confirms the signal from the official PMI, that the covid-stricken Chinese economy is in retreat. The Caixin PMI which focuses on small export-orientated firms is that external demand continues to put downward pressure on the economy. The PBOC is now focused on economic growth following a slump in activity said Governor Yi Gang.
South Korean inflation slowed to 5% in November, whilst core CPI held steady.ILS
USDILS trades -1.81% lower than Wednesdays levels, following USD weakness sourced from Jerome Powell’s speech earlier this week.Data & Events
US Employment Data
Euro-area Oct. PMI
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