Market scrambles to assess Fed’s tightening pace; EU not willing to renegotiate Northern Ireland Protocol; Beijing reports highest covid cases in three weeks.
June 14, 2022
GBP/USD 1.2172 GBP/EUR 1.1629 EUR/USD 1.0467 USD/CAD 1.2906 EUR/CHF 1.0363 EUR/SEK 10.6164 EUR/NOK 10.3646 EUR/DKK 7.4410 USD/ILS 3.4461 AUD/USD 0.6935 NZD/USD 0.6269 USD/SGD 1.3905 USD/JPY 134.26 USD/CNH 6.7492 USD/INR 78.0613 EUR/ILS 3.6068 GBP/ILS 4.1944 USD/ZAR 16.0828
The UK’s jobless rate is expected to dip to 3.6% in the three months through April, highlighting that the labour market is incredibly tight.
The EU is potentially preparing to bring legal proceedings against the UK as the UK government prepares to override the parts of the Brexit Deal. The EU has stated that it will not renegotiate the Northern Ireland Protocol.
GBPUSD trades 0.34% higher intraday.EUR
Germany’s ZEW Survey for June is expected to show concern moderating, with Sentiment set to improve slightly, however a negative outlook for the Germany economy remains.
The ECB are determined not to share its plans to fight bond-market stress. This follows fears that as the ECB begins tightening, it could stress the bloc’s most indebted economies. Germany’s CPI data held steady at 7.9% YoY.
EURUSD trades 0.6% higher as we print, the Euro Stoxx has opened higher, up 0.7%.USD
After May’s CPI shock, the Fed could accelerate the pace of quantitative tightening to catch up with inflation. Swap markets are pricing in a near 70% chance of a 0.75% hike, however consensus is still a 0.5% hike.
US factory-gate inflation may have accelerated 0.8% MoM from 0.5% in April., with core PPI is also expected to quicken. Following last weeks CPI, PPI will be a good reference for mapping PCE inflation.ASIA/PACIFIC
Beijing reported 74 covid cases yesterday, the highest in three weeks with authorities reimposing restrictions. Businesses in Hong Kong have urged the city to roll back quarantine rules for travellers.
The BOJ is under pressure to add longer-date maturities to its bond-buying policy. Meanwhile, swap markets see the RBA raising rates by 0.5% again next month which would be the central banks first ever consecutive rate hike.ILS
USDILS surged through 3.4 yesterday, climbing to highs near 3.48 following significant dollar strength. USDILS trades lower 0.8% through this morning.Data & Events
UK April Unemployment
Germany June ZEW Survey
US May PPI
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