PM survives conservative rebellion; ECB project high prices throughout 2024; RBA surprises market with 0.5% hike.
June 7, 2022
GBP/USD 1.2460 GBP/EUR 1.1672 EUR/USD 1.0675 USD/CAD 1.2609 EUR/CHF 1.0386 EUR/SEK 10.4913 EUR/NOK 10.0954 EUR/DKK 7.4390 USD/ILS 3.3387 AUD/USD 0.7179 NZD/USD 0.6444 USD/SGD 1.3792 USD/JPY 132.85 USD/CNH 6.6760 USD/INR 77.7100 EUR/ILS 3.5640 GBP/ILS 4.1598 USD/ZAR 15.5249
Boris Johnson might have won last nights no-confidence vote, however the vote in which 41% of his own MPs voted against him might have weakened his footing in Downing St. The rebellion exceeded that suffered by Theresa May who was ousted six months later. Johnson must now win over MPs whilst avoiding a potentially damaging blue-on-blue civil war.
Despite large gains made by the pound yesterday ahead of the vote, it has since slipped -0.83% to below pre-vote levels.
UK consumers have been cutting back on spending amidst soaring inflation. Retail sales in may fell 1.1% YoY with furniture and electronics hit hardest.EUR
Economists are expecting the ECB to update inflation forecasts to project 2% inflation throughout 2024. This means prices could remain elevated over the medium term, satisfying the criteria for the central bank to begin tightening firstly in June, with an end to bond-buying and secondly with July’s much anticipated first hike.USD
The US trade deficit is expected to narrow significantly in April, to $89.5 billion from $109.8 billion. Meanwhile, Debates continue over Gun laws; republicans will allegedly only accept narrowly targeted measures.
The dollar trades 0.3% higher as we print, beginning its third day of consecutive gains.ASIA/PACIFIC
The RBA surprised markets by hiking interest rates by 0.5% to 0.85%. The consensus had been on a 0.25% hike; however, the RBA said its committed to reining in inflationary pressures. The Australian three-year yields rose 0.19% to 3.16%. AUDUSD spiked up 0.76% briefly but has since fallen to pre-hike levels.
Japan’s household spending gained 5.1% meaning spending levels are now at their highest since last spring. USDJPY trades higher by 0.72% as we print.ILS
Over the last 20 days, USDILS has struggled to find directional momentum, regularly trading between 3.32 and 3.36. USDILS trades down -3.27% since this time a month ago.Data & Events
Germany April Factory Orders
Spain Industrial Output
UK Services/Composite PMI
Euro-area investor confidence.
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