UK CPI moderates slightly as core prices advance, Hot US CPI revives dollar strength, European gas imports roughly a fifth of imports last September.
September 14, 2022
GBP/USD 1.1528 GBP/EUR 1.1539 EUR/USD 0.9991 USD/CAD 1.3169 EUR/CHF 0.9590 EUR/SEK 10.6514 EUR/NOK 10.0834 EUR/DKK 7.4368 USD/ILS 3.4270 AUD/USD 0.6729 NZD/USD 0.6000 USD/SGD 1.4040 USD/JPY 143.26 USD/CNH 6.9722 USD/INR 79.4950 EUR/ILS 3.4238 GBP/ILS 3.9507 USD/ZAR 17.4297
Britain’s inflation eased from its highest level in 40 years as petrol prices eased. Prices remained uncomfortably high for the Bank of England who are now set to meet next Thursday following the death of HM Queen Elizabeth II. CPI rose 9.9% from a year ago, down from a 10.1% reading last week. The UK’s core prices accelerated by 0.1% up to 6.3%.
Following the inflation print, sterling erased gains against the dollar, slipping from 1.1530 to below 1.15. Forecasts now see inflation peaking at 10.5% in October, well below the BoE’s 13% prediction. There will likely be further dampening of prices once the government’s energy intervention plan is enacted.EUR
EC president Von der Leyen has called for radical steps to stem the energy crisis. Gazprom’s exports to Europe have been slashed to the bare minimum, with gas imports to Europe currently sit at roughly a fifth of what they were last September. The EU may raise €140 billion by capping revenues on some energy firms, there are also rumours of the EU imposing a mandate on member nations to reduce gas consumption by 5%.
The euro slipped back below parity following yesterday’s CPI print adding to the monetary policy divergence between the ECB and Fed.USD
US CPI shook global currency markets yesterday. Inflation despite moderating to 8.3% printed higher than the forecasted rate. The key factor was core inflation (excluding food and energy) surging 0.6% higher offsetting some of the decline from lower fuel prices. Growth in core inflation suggests that inflation may be ‘sticky’ requiring further action from the federal reserve. Markets are pricing in 83-ps of hike following yesterdays CPI print, up from 73-bps two-days prior. The dollar rallied nearly 2% as markets anticipate higher interest rates.
US economy is expected to create jobs at a slower pace over the next 10 years as the nation demographically ages, and younger Americans are less likely to join the labour force. By 2031, 9.1% of workers are expected to be at least 65 years old.ASIA/PACIFIC
The Yen rallied from to the 143 level, following announcements from the Finance Minister Suzuki that the government would not rule out any response, including market intervention, should current FX trends continue.
Policy makers in Asia have been fighting to push back the surging dollar, as many currencies trade at lows against the dollar. The challenge may be exacerbated by depleting stocks of foreign reserves.ILS
USDILS gained through yesterday because of the US CPI print, lifting the cross back above 3.4.
Israel’s CPI is set to be published tomorrow; it is anticipated to fall to 4.8% YoY down from 5.2% the prior month.Data & Events
UK House Price Index
Eurozone Industrial production
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