UK economy performs better than expected, US jobless claims continue to defy anticipation of a cooling labour market.
March 3, 2023
GBP/USD 1.1988 GBP/EUR 1.1291 EUR/USD 1.0617 USD/CAD 1.3559 EUR/CHF 0.9949 EUR/SEK 11.1301 EUR/NOK 11.0444 EUR/DKK 7.4427 USD/ILS 3.6607 AUD/USD 0.6762 NZD/USD 0.6237 USD/SGD 1.3463 USD/JPY 136.34 USD/CNH 6.9094 USD/INR 81.9625 EUR/ILS 3.8866 GBP/ILS 4.3884 USD/ZAR 18.1627
BOE Chief economist Pull spoke yesterday stating that the UK economy had performed slightly stronger than expected over the past month, and that wage growth was sticker than they thought. Pills comments suggest that stronger demand than anticipated may keep inflation high, which could point to further rate hikes. Pill further mentioned that companies feel they need to increase prices not only recover costs but also boost profit margins. These comments seem more hawkish than those than came from Governor Bailey earlier in the week.
In spite of Rishi's breakthrough in relations with the EU, he is refusing to rush Britain back into the EU's 95.5 billion euro Horizon science programme. Senior officials state he is sceptical about the value of the world's largest research programme and the cost of British participation. Although Britain was expected to 15 billion for the full 7 years, the sides must now agree on how to handle this going forwards.EUR
The euro slipped 0.6% against the dollar yesterday as markets continue to digest the weeks fundamental data. CPI for the Euro Area slowed less than the 8.3% forecast, printing at 8.5% YoY, whilst the core figure surged to a record high, reinforcing speculation that the ECB will have to continue raising rates. Despite hawkish rhetoric historically boosting the single currency, sentiment appears to be waning, as unemployment also failed to match forecasts remaining unchanged at 6.7%, highlighting areas of key economic concern.
Comments from Christine Lagarde reinforced expectations of further rate rises, citing that hikes may need to continue beyond the planned 50bps move this month. Meeting minutes released later in the day showed ECB members are not concerned about “overtightening” and that there is continued value in “frontloading rate hikes”, as core inflation remains prominent.USD
US jobless claims continue to defy expectations that the labour market is cooling. Jobless claims dropped once again highlighting the reluctance of business to release workers outside of specific sectors (i.e.: tech).
The appointment of Federal Reserve board members has become increasingly politically charged since the Trump era. As partisan divides deepen in Washington, it is something that the Biden administration will be concerned with, as any nominations must be approved by the Senate. It is likely that the white house will try to replace Brainard with a like-minded voting member.
The dollar slipped away from highs of 105.2 yesterday, currently trading around the 104.7 mark. US equities advanced slightly through yesterday with the NASDAQ closing 0.73%.ASIA/PACIFIC
Inflation in Tokyo decelerated for the first time in more than a year. CPI excluding fresh food slowed to 3.3% in February from 4.3% in January. Japan’s jobless ate edged lower to 2.4%.
Malaysian PM warned that a US military presence in the south China sea could escalated tensions between China, and other claimants.ILS
Economist have warned the political crisis in Israel presents a danger to Israel’s economy; this meeting occurred at Tel Aviv university on Thursday night.Data & Events
UK Feb PMIs
Euro-Area Jan. PPI
US Feb PMIs and ISM Services Index
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