UK Inflation rose to highest in 40 years; Fed warns of hiking above neutral rate; Sweden and Finland submit for NATO membership.
May 18, 2022
GBP/USD 1.2403 GBP/EUR 1.1801 EUR/USD 1.0511 USD/CAD 1.2846 EUR/CHF 1.0486 EUR/SEK 10.4819 EUR/NOK 10.2371 EUR/DKK 7.4421 USD/ILS 3.3546 AUD/USD 0.7009 NZD/USD 0.6354 USD/SGD 1.3866 USD/JPY 129.23 USD/CNH 6.7598 USD/INR 77.5675 EUR/ILS 3.5259 GBP/ILS 4.1608 USD/ZAR 15.9570
UK Inflation rose to the highest in 40 years at 9%, and now is the highest among G7 countries. Stagflation – high inflation and slow growth – adds downside to sterling, GBPUSD trades 0.6% lower intraday. April’s inflation jumped primarily driven by the new household energy cap.
Kwasi Kwarteng, Business secretary, has urged fuel retailers to offer fair pricing to drivers. This comes as government stimulus to ease energy costs has failed to reach consumers.EUR
The Czech Republic has insisted that their primary issue will be Ukraine’s application to the EU, when they take over the EU presidency. Meanwhile, the EU has debated joint-debt agreements, and using frozen assets from sanctioned individuals to rebuild Ukraine post-war.
EURUSD trades lower -0.3% intradayUSD
Fed warns of aggressive hiking path, saying that the central bank could raise rates above the neutral rate. This could come at a cost to the economy, vowing to push until inflation falls. The dollar has climbed of the back of an increasingly hawkish fed, trading 0.2% higher. This was echoed by Chicago Fed chief, stating that front-loading hikes was necessary.
Sweden and Finland are set to submit NATO applications today, Putin stated that there would be no action for joining NATO, however, a military build-up in these countries would be met with retaliation.
US equities rallied yesterday, with the NASDAQ up 2.02%.ASIA/PACIFIC
The race of Australia’s premiership heats up this week, ahead of Saturday’s election. The countries stance on China is top of the agenda.
Japan’s economy contracted by 1% in the first quarter of 2022. It was above consensus of a 1.8%, but not enough for the Bank of Japan to normalise policy.ILSUSDILS slipped this week from 3.42 down to 3.34. Positive news from covid-stricken China has spurred a flow out of the safe-haven dollar.Data & Events
Euro-area April CPI
UK House Price Index
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