Surge in Services Activity could prove difficult for the Fed’s inflation fight, Beijing scraps some PCR testing requirements in important covid-zero pivot.
December 6, 2022
GBP/USD 1.2204 GBP/EUR 1.1628 EUR/USD 1.0496 USD/CAD 1.3607 EUR/CHF 0.9901 EUR/SEK 10.9099 EUR/NOK 10.4073 EUR/DKK 7.4378 USD/ILS 3.4026 AUD/USD 0.6718 NZD/USD 0.6316 USD/SGD 1.3569 USD/JPY 136.87 USD/CNH 6.9966 USD/INR 82.3138 EUR/ILS 3.5712 GBP/ILS 4.1525 USD/ZAR 17.3210
UK retail sales jumped in November with promotions surrounding Christmas and the World cup, however, rising inflation meant that consumers were paying more to buy less.
The British Retail Consortium said the value of spending in shops rose at an annual rate of 4.1% last month. The increase was less than half the pace of inflation which has risen 11.1%EUR
With the highest rate of inflation in the euro-area’s largest economies, Italy may be the test-case for the ECB to monitor second-round effects. Data on pay suggests that Italians are receiving one-off payments to cope with price increases. These are unlikely to cause a wage-price spiral as they only create temporary rises in pay. The underlying trend in wage growth remains muted.USD
US Service sector activity surged in November; this comes as bad news for the Fed’s fight against inflation. The holiday season has bolstered business activity. This will likely be reflected in the US’s core services inflation. In Powell’s speech last week, he stated that core services “may be the most important category for understanding the future evolution of core inflation.
The Robust Nov. jobs report reinforces a point Powell made in his Nov. 30 speech. The resurgence of hourly earnings growth shows that labour shortages are still pressuring inflation. The tight labour market reinforces the idea that the Federal Reserve’s terminal rate will reach above 5%.ASIA/PACIFIC
Beijing will scrap covid testing requirements at supermarkets, office buildings and most other public venues in the capital from today in a notable pivot for their covid-zero policy. Residents still need to provide negative PCR results before entering bars, restaurants, and schools. China is reporting fewer covid cases as a wave that started last month appears to be tailing off.ILS
All six of the Bank of Israel’s monetary committee supported the central bank increase of 0.5% In the Nov. meeting. The Israeli economy has continued to record strong economic activity, accompanied by a tight labour market, and an increase in the inflation environment.Data & Events
UK Nov Construction PMI
Germany Nov Construction PMI
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