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
Trading in financial instruments may involve a high degree of risk and may not be suitable for all investors. Trading in financial instruments can result in both loss and profit. Investors should carefully consider whether financial instruments suit their needs, financial resources and personal circumstances.
The information contained in this material is solely for informational purposes only and it is not and should not be construed as an offer or a solicitation of an offer to buy or sell any financial instruments and cannot be relied upon as a representation that any particular transaction necessarily could have been or can be effected at the stated prices. This material does not contrue advice.
For more analysis on FX markets or information regarding SVB's FX services:
0800 023 1440 from within the UK
+44 207 367 7880 from overseas
See all of SVB's latest FX information and commentary.
© 2022 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB).
Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department of Business Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Silicon Valley Bank is a subsidiary of SVB Financial Group, a Delaware corporation and is an affiliate of SVB Financial Group UK Limited. SVB Financial Group UK Ltd is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. 5572575 and is authorised and regulated by the Financial Conduct Authority, with reference number 446159. SVB Financial Group and its subsidiary Silicon Valley Bank are members of the Federal Reserve System and Silicon Valley Bank is a member of the FDIC.
Your eligible deposits with Silicon Valley Bank UK are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered. Please click here for further information or visit http://www.fscs.org.uk. For more detailed information about coverage and limits, please review our FSCS Information Sheet at http://www.fscs.org.uk.
This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources. Opinions expressed are our opinions as of the date of this content only. The material is based upon information which we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such.