Markets split over BOE tightening path, Difficult challenge as EU aim to roll out energy policy bloc wide, Xi Jinping to meet Putin.
September 15, 2022
GBP/USD 1.1531 GBP/EUR 1.1558 EUR/USD 0.9976 USD/CAD 1.3163 EUR/CHF 0.9604 EUR/SEK 10.6942 EUR/NOK 10.0815 EUR/DKK 7.4364 USD/ILS 3.4249 AUD/USD 0.6756 NZD/USD 0.6007 USD/SGD 1.4060 USD/JPY 143.66 USD/CNH 6.9797 USD/INR 79.5825 EUR/ILS 3.4166 GBP/ILS 3.9489 USD/ZAR 17.4603
UK headline inflation eased yesterday, however inflation remains roughly 5-times above the target rate, with the Bank of England expected to deliver another outsized hike at its delayed policy meeting. The base case is split currently, with markets unsure whether to expect a 50-bps or 75-bps hike. An upside surprise could strengthen sterling, with a smaller hike likely adding to the pound’s woes.
UK Consumer confidence has slipped into negative territory for the first time since the pandemic lockdown in the middle of 2020, with homeowners concerned the value of their property could be at risk. Sentiment dropped to 98.8 in August.EUR
France is planning to cap energy-price hikes for households at 15% starting next year. Meanwhile, the European commission proposed a mandator cut on energy use in the bloc, as well as steps to ease crunch in energy and commodity markets cause be collateral demands. Gas prices remain roughly eight times higher than they should be for this time of year.
The ECB’s Holzmann is expecting CPI to accelerate further citing that the ECB will act strongly to reign in inflation. He also accepted that inflation rates between 3-4% over the next 5 years are a real possibility, but not the ECBs goal.USD
The dollar edged higher as markets remain focused on US economic data following Tuesday’s hot CPI print. Producer prices declined providing some relief for the inflation outlook. The likelihood of a 100-bps hike edged higher through yesterday providing some support to the greenback.
Janet Yellen has warned that a strike by rail workers would cause a “significant impediment” to shipping goods nationwide. The disruption in supply chains could cause the US to feel a spill over from a possible recession in Europe over the winter.ASIA/PACIFIC
Chinese president Xi Jinping is set to meet Russian President Putin in Uzbekistan today. Xi met with Central Asian leaders. Both leaders are there for the Shanghai Cooperation Organisation, a Beijing led group attempting to counter US-Dominated alliances.
Chinese GDP forecasts have dropped steadily since March, when the official target of 5.5% was disclosed. Currently consensus sits at 3.5% of expansion this year.ILS
Israel has sold $11.6 billion worth of bonds this year as of today, issuance is down 61% compared to last year.
USDILS trades flat against yesterday trading above 3.42.Data & Events
UK BOE/Ipsos inflation next 12 months
Euro-Area July trade Balance
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