Powell signals downshift convincing market of lower peak rates. UK House prices fall by 1.4%. Beijing reports record daily cases.
December 1, 2022
GBP/USD 1.2076 GBP/EUR 1.1612 EUR/USD 1.0401 USD/CAD 1.3434 EUR/CHF 0.9825 EUR/SEK 10.9333 EUR/NOK 10.2422 EUR/DKK 7.4374 USD/ILS 3.4221 AUD/USD 0.6805 NZD/USD 0.6314 USD/SGD 1.3587 USD/JPY 136.52 USD/CNH 7.0725 USD/INR 81.2925 EUR/ILS 3.5590 GBP/ILS 4.1323 USD/ZAR 17.3179
UK House prices fell by 1.4% in November, significantly higher than the 0.6% drop that was expected. Annual prices decelerated sharply from 7.2% in October to 4.4%, with further slowing likely over the coming months. Further tightening by the Bank of England may only serve to exacerbate this slowdown.EUR
The ECB is now entering a new phase in its fight against inflation, as decisions over monetary policy become increasingly difficult, with serious implications in the case of a misstep from the governing council. Each hike may now require finer judgements about the economic impacts, with the issue only made more complex by worsening financing conditions across the bloc, notably in some of the bloc’s most indebted countries.USD
The Federal Reserve’s latest Beige Book downgraded the assessment of US activity. It stated that tighter monetary policy has cooled aggregate demand and a sustained period of below-trend growth is required to restore price stability. Despite this, most districts reported slight/modest advancements.
Powell’s speech yesterday, his last before a blackout period, hinted at a downshift to a 0.5% hike at the December meeting. He explained that labour supply is unlikely to further advance without congressional action. Markets scaled back their expectations for peak Fed rates, with some seeing rates not reaching 5%.ASIA/PACIFIC
South Korea’s exports fell 14% YoY in November, the most in two and a half years, dragged lower by an economic slowdown in China. Import advanced 2.7%.
Beijing reported a record 5,006 daily Covid cases yesterday, the figures have been high enough to send panic through the capital.ILS
Israel sold $13.9 billion worth of bonds this year, with issuance down 59%. USDILS dropped yesterday following Powell’s speech by over 1%.Data & Events
Euro-area Oct. Unemployment
US Oct. PCE Deflator
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