Red hot CPI suggests Fed will hike by 75-bps, Kwarteng rushes back on news of mini-budget U-turn.
October 14, 2022
GBP/USD 1.1293 GBP/EUR 1.1567 EUR/USD 0.9764 USD/CAD 1.3751 EUR/CHF 0.9750 EUR/SEK 10.9947 EUR/NOK 10.3332 EUR/DKK 7.4381 USD/ILS 3.5413 AUD/USD 0.6320 NZD/USD 0.5654 USD/SGD 1.4231 USD/JPY 147.55 USD/CNH 7.1906 USD/INR 82.3875 EUR/ILS 3.4579 GBP/ILS 3.9993 USD/ZAR 18.1700
Reports circulated yesterday that officials in No. 10 and the Treasury were drawing up plans for a U-turn on Kwarteng’s mini budget. UK and global markets rallied on reports of the U-turns with the Pound closing 2% higher versus the dollar on Thursday. The news forced Kwasi Kwarteng to rush back to the UK from the IMFs meeting in the US. The U-turn comes importantly the day before the Bank of England is set to end it bond-buying scheme.EUR
Year-on-Year French CPI moderated in September at 5.6%, unchanged from the month prior. MoM inflation was -0.6% lower showing some signs of cooling.
The ECBs Guindos has stated a technical recession may become the euro-zone’s baseline scenario as the bloc faces the ‘difficult combination’ of low growth, and high inflation over the winter.USD
The rapid rise in US consumer process through 2022 showed no signs of slowing in September, which saw delivered high volatility across FX markets, seeing the dollar index climbing 1% before falling 1.34% before yesterday’s close. The Consumer price Index rose 6.6% on an annual basis, faster the 6.3% in August. Whilst markets were already expecting a 75-bps hike in November, yesterdays hotter-than-expected CPI heavily weighs on the December meeting, where there was speculation that the Fed would downshift to a 50-bps hike, this expectation has now leant towards another 75-bps increase.ASIA/PACIFIC
As China prepares for its communist party congress, there is much speculation regarding whether the meeting of minds will bring any changes to China’s zero-covid agenda. The congress is shrouded in pessimism given the weak economic activity across China so far in 2022.ILS
USDILS trades significantly lower from yesterday’s highs, following a brief surge above 3.6 following the US CPI print. USDILS currently trades 1.73% lower from that high.Data & Events
US retail sales
US Consumer Sentiment
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