Truss resigns as short-serving PM setting UK up for re-run of conservatives leadership vote, EU agrees terms to address bloc's energy crisis with gas price gap.
October 21, 2022
GBP/USD 1.1156 GBP/EUR 1.1414 EUR/USD 0.9774 USD/CAD 1.3819 EUR/CHF 0.9837 EUR/SEK 11.0629 EUR/NOK 10.4406 EUR/DKK 7.4386 USD/ILS 3.5608 AUD/USD 0.6259 NZD/USD 0.5651 USD/SGD 1.4278 USD/JPY 150.73 USD/CNH 7.2686 USD/INR 82.7275 EUR/ILS 3.4801 GBP/ILS 3.9722 USD/ZAR 18.3652
British PM Liz Truss has resigned following 45 days in office overshadowed by political U-turns and financial turmoil. Speculation over her resignation saw a rally in GBPUSD of roughly 0.40% ahead of the announcement however the uncertainty over the nation's future has erased these gains. The FTSE100 gained to 6950, however high volatility has since erased gains with the index trading 0.15% lower. As of this morning, GBPUSD trades -0.75% lower.
Truss announced that the conservative leadership election to select her replacement will be concluded over the next week, as the party attempt to avoid a drawn-out contest. The current favourite is the runner-up from the previous election, Rishi Sunak.
The Bank of England is to sell £6 billion of bonds before the end of the year, as it corrects the balance sheet following an emergency bond-buying scheme over the last month.EUR
The ECB is seen hiking rates to 2.5% in March 2023, more than the 1.5% seen in an earlier poll of economists. This change is primarily driven by markets pricing in a 75-bps hike through November, and a 50-bps hike in December to end the year.
The EU has agreed to press ahead with emergency action to address the bloc’s energy crisis. Germany has yielded to pressure surrounding a temporary price cap on natural gas.USD
Jobless claims for the week point to a very low rate of firing. Initial jobless claims declined by 12k to 214k beating expectations with the reading below 233k. Ultimately the unemployment rate is expected to 4.9% by 2024.
Uncertainty over the Fed’s tightening path has impacted demand on short term bills, with the four and eight-week bill trading 1bp lower.ASIA/PACIFIC
Japan’s consumer prices rose 3% YoY in September, up from 2.8% in August. Inflation has reached its quickest pace since 1991.
China locked down parts of the Xi’an city, confining roughly 13 million people to their homes. Amid the backdrop of party congress, this highlights the impact that China’s covid-zero policy can have on economic growth.ILS
USDILS trades 0.3% higher intraday. USDILS has remained above the 3.5 level for the last month, following significant dollar strength after the UK's fiscal crisis in September.Data & Events
Euro-area Oct. Consumer Confidence
Ireland Sept. PPI
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