Powell hints Fed could hike by half a percent; EU to discuss curbs on Russian oil: Gap between 5- and 30-year treasury yields smallest since 2007.
March 22, 2022
GBP/USD 1.3177 GBP/EUR 1.1975 EUR/USD 1.1004 USD/CAD 1.2616 EUR/CHF 1.0282 EUR/SEK 10.4151 EUR/NOK 9.6539 EUR/DKK 7.4398 USD/ILS 3.2205 AUD/USD 0.7406 NZD/USD 0.6908 USD/SGD 1.3582 USD/JPY 120.46 USD/CNH 6.3729 USD/INR 76.1750 EUR/ILS 3.5436 GBP/ILS 4.2434 USD/ZAR 14.8797
London police have begun interviewing witness’ in the ‘Party gate’ saga. The PM has yet to be interviewed.
The Focus is now on the Chancellor Sunak, ahead of his spring statement tomorrow. The UK tax burden is expected to reach its highest point in 70 years under Sunak’s treasury. He is expected to resist the urge to spend, with tighter fiscal policy, a stark difference from the 2020 treasury which relaxed fiscal policy throughout the pandemic.
Sterling fell 0.7% against the Dollar on the back of an increasingly hawkish Fed, however has reversed some losses this morning.EUR
The EU will meet today to discuss curbs on Russian oil imports, in turn forcing Brent crude prices higher. Reports suggest progress is being made in finding alternative energy suppliers for the continent, with a German-Qatari deal made for natural gas supply.
The bloc has entered an era of energy inflation, primarily a result of its climate commitments and fossil fuel dependence, this has created further price pressure, and could lead the ECB to adjust its inflation target.
EURUSD trades 0.44% lower on the week so far. According to reports, the ECB may begin hiking rates late in 2022/early 2023 if the Russian conflict doesn’t substantially depress the EU economy.USD
Powell’s comments on the extent to which the Fed might hike rates triggered a bond sell-off, driving short-dated treasury yields down. The gap between 5-year and 30-year yields narrowed to the smallest since 2007, signalling that tighter monetary policy may hinder economic growth.
Powell disputed claims that the gap between yields is indicating a potential recession, prompting investors to watch the short-term curve which is yet to invert.
The Dollar has rallied following Powell’s comments yesterday, the DXY trades up 0.31%ASIA/PACIFIC
Hong Kong appears to have accepted defeat in implementing a covid-zero policy, rolling back mass testing, and easing of travel restrictions.
A close aide of Japanese PM Kishida, has suggested Japan may have to consider economic stimulus amid rising prices, potentially needing an extra budget.ILS
USDILS trades in the low 3.22s after briefly reaching highs of 3.2360 during the Asian session.Data & Events
ECB – Several speakers
BoE – Cunliffe speaks
UK – Feb Public finances
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.
By providing your email address and clicking on the Subscribe button below, you consent to receive emails from Silicon Valley Bank for your chosen categories. You also consent to the terms of our Privacy Notice. If you have privacy questions, you may contact us at PrivacyOffice@svb.com. You can withdraw your consent at any time.
Thank you for subscribing to SVB's Daily FX Update.
You're almost done. Please check your email box and follow the instructions to confirm your subscription. If you did not receive an email please check your Spam or Bulk E-Mail folder just in case the confirmation email got delivered there instead of your inbox. If so, select the confirmation message and mark it Not Spam, which should allow future messages to get through. Please add us to your trusted list of senders, contacts or address book.
Please note that we will continue to send you communications that we need to send you (for example, to keep you updated on operational changes to your account, a product or a service) or that we are required to send you by law.
© 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.