Sunak sacks Zahawi over tax ethics, German GDP fails to meet forecasts, UK to face biggest day of industrial action this week
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January 30, 2023
GBP/USD 1.2392 GBP/EUR 1.1376 EUR/USD 1.0894 USD/CAD 1.3333 EUR/CHF 1.0024 EUR/SEK 11.2354 EUR/NOK 10.7535 EUR/DKK 7.4382 USD/ILS 3.4771 AUD/USD 0.7076 NZD/USD 0.6485 USD/SGD 1.3130 USD/JPY 129.94 USD/CNH 6.7564 USD/INR 81.5675 EUR/ILS 3.7878 GBP/ILS 4.3088 USD/ZAR 17.2852
Rishi Sunak continues to fight off the Tory sleaze era ignited by Boris – early Sunday morning the Tory PM, received the report which confirmed that the conservative chair, Nadhim Zahawi, had not behaved honorably over the handling of his tax affairs, where he failed to disclose the details of his dispute which led to a £5mio settlement. The report found several breaches of the ministerial code, forcing the PM to sack Zahawi, a fellow MP he had defended in parliament just a fortnight ago.
The UK braces for the biggest day of strikes this winter on Feb 1st, as strikes will close schools, cancel university classes, cripple rail services and disrupt much of the public sector. Despite the escalation in walkouts, the government has made it clear that it is not prepared to reopen talks over this year’s public sector pay deals.
GBPUSD closed last week down -0.09% and has opened relatively flat this morning. The FTSE opens in the red, down -0.41% as we print.EUR
EURUSD is trading lower this morning, back below 1.0900, as markets anticipate this week's flurry of central bank meetings and the future direction of interest rates. Despite the loss in momentum, the single currency is still on track for a fourth consecutive monthly gain. Prelim YoY Spanish inflation ticked slightly higher than previous figures, despite easing for the last five months. German GDP failed to meet forecasts, with the economy shrinking 0.2% during Q4 2022. The prints gave support to recent ECB hawkish rhetoric, boosting the Euro ahead of Thursday’s meeting.
Shares fell on Monday as investors await a week of heavy data, the Euro Stoxx 50 slipped 0.5%. Natural gas prices fell following the return of milder weather across the continent. Benchmark futures fell 3.5%, whilst Dutchfront-month gas, the benchmark used for Europe, lost 17% last week, the biggest decline since December.USD
A month into 2023, “Fed talk” revolves around expectations of rate cuts later in the year. However, whilst CPI was rightly a key data point during the Fed’s rapid tightening, some believe that as the Fed looks to end its tightening cycle that the PCE deflator will be the core tool to gauge price pressures. The PCE deflator declined to 5% from 5.5% the previous month, however, shows the inflation isn’t cooling as much as last month's headline CPI print suggests.
Political unrest has been stirred once again following the death of Tyre Nichols, who after a confrontation with a Memphis police unit.
The dollar trades slightly lower intraday, as it continues much of last Friday's directionless trading.ASIA/PACIFIC
The decline in Adani shares has continued, with the three day sell-off amounting to $72 billion in market value losses. The downward spiral has sparked contagion fears into Indian markets, with the NSE Bank Nifty Index losing over 6% over the last week.
The Yuan rallied on Asian open, gaining 0.6% against the Dollar as trading resumed following the national holiday. Data during the period boosted sentiment, with tourism, services, hospitality and leisure revenues all showing a boost compared to last year, as China held its first unrestricted Lunar New Year celebrations since 2019.ILSFollowing the announcement of the governments planned judicial reforms, new reports have sparked concern over future foreign investment and subsequent tech sector growth into Israel. The shekel weakened in line with these concerns, with USDILS trading 1.2% higher intraday.Data & Events
Euro Area – Consumer Confidence
Germany – GDP
Japan – Industrial Production
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