Powell's resolve harden expectations of further jumbo rate hikes, ECB raises anticipation of another large-sized hike in October, Truss plan could mean UK recession no longer economic base case
September 9, 2022
GBP/USD 1.1593 GBP/EUR 1.1518 EUR/USD 1.0066 USD/CAD 1.3026 EUR/CHF 0.9703 EUR/SEK 10.6930 EUR/NOK 10.0147 EUR/DKK 7.4363 USD/ILS 3.4240 AUD/USD 0.6836 NZD/USD 0.6106 USD/SGD 1.3991 USD/JPY 142.80 USD/CNH 6.9377 USD/INR 79.6363 EUR/ILS 3.4465 GBP/ILS 3.9695 USD/ZAR 17.4112
GBPThe UK enters a period of public mourning today following the death of Queen Elizabeth II at the age of 96. Following her 70-year reign, she saw substantial reforms from war-time into modern Britain today. King Charles III succeeds her.
Yesterday saw Liz Truss' energy plan announced. The plan may result in recession no longer being the base case for the UK economy. Headline inflation may moderate with peak inflation having already passed, and even the BOEs 2% target might be in sight by the end of next year. The remaining inflation might be sticky however, which may see interest rates rising higher than 3%. The plan involves a £2,500 cap for households alongside a six-month scheme for aiding businesses.EURThe euro advanced to the highest level in more than a week after the ECB raised rates by 75-bps. The largest single hike since the euros inception in 1999, and the first time the ECB have set rates above 0 since 2012.
Lagarde reiterated that the ECB will remain flexible and will be data led over the next few months, clearing the way for another large hike in October should it be required. Markets are currently pricing another 84-bps of tightening through OctoberUSDIn Powell's tone yesterday, the Fed chair said that officials will not flinch in the battle to curb inflation, hardening expectations that there will be another large rate hike later this month. Markets are currently leaning towards a 75-bps hike in September, with 71 basis points currently priced in.ASIA/PACIFICBOJ Governor Kuroda met PM Kishida as the Yen fells considerable against the dollar this week, with USDJPY reaching above 145. The Yen has made gains through yesterday currently trading around 143.ILSIsrael's budget surplus remains at 0.6% of GDP.
USDILS trades down on yesterday as dollar strength dissipates globally. USDILS trades -0.52% intraday.Data & EventsState funeral plans expected for HM Queen Elizabeth II
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