Truss faces further party unrest as ministers threaten to resign, Beige Book points to growing recession risk, Australian labour market begins to stall.
October 20, 2022
GBP/USD 1.1213 GBP/EUR 1.1455 EUR/USD 0.9790 USD/CAD 1.3757 EUR/CHF 0.9834 EUR/SEK 10.9754 EUR/NOK 10.3781 EUR/DKK 7.4394 USD/ILS 3.5505 AUD/USD 0.6273 NZD/USD 0.5662 USD/SGD 1.4257 USD/JPY 149.94 USD/CNH 7.2544 USD/INR 82.9800 EUR/ILS 3.4757 GBP/ILS 3.9811 USD/ZAR 18.3406
Liz Truss’ premiership continues to hang in the balance as yesterday featured more talk of rebellion. The Home secretary was fired for mishandling secret documents on a personal phone, upon her exit she criticised the PM. Rumours have emerged that cabinet minister are holding private talks regarding whether Truss should quit.
Yesterday’s acceleration in UK inflation might leave the BoE with little choice but to keep pushing rates higher. The governments fiscal U-turn has eased some pressure on central bankers; however, market still expect 75-bps at the next meeting.EUR
It is anticipated that the ECB will announce a 75-bps hike at its meeting a week today. At this meeting the governing council will probably decide the timing of quantitative tightening. Once the ECB raises rates to the terminal rate, it is expected to start shrinking the balance sheet.
Supercore inflation which measures underlying inflation accelerated 5.8% in September from 5.2% in August, highlighting that further tightening could be required by the ECBUSD
The Federal reserve beige book represents an upgrade from the unchanged early-September report. The details and outlook were more pessimistic as concerns about demand grow. Many districts noted recession risks brewing. Some models for ‘recession probability’ are beginning to point to a 100% probability of a recession in the next 12-months.ASIA/PACIFIC
Chinese officials are debating whether to reduce the amount of time people arriving in China must spend in quarantine, as the country’s covid-zero policy leaves the mainland isolated from the global economy.
Data suggest Australia’s labour market has stalled slightly. Employment and hours worked remain around June 2022 levels, with want ads declining. This combined with returning migration is set to raise the employment rate.ILS
Israel’s YTD bond sales amount to $11.9 billion, with issuance down 62% compared to the same period last year. USDILS trades 0.25% higher intraday.Data & EventsEuro-area Current Account
EU leaders summit
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