UK Jobs data remains strong with unemployment at historic low, Germany agrees to joint-issuance of EU debt, Australian consumer confidence hits record lows.
October 11, 2022
GBP/USD 1.1040 GBP/EUR 1.1373 EUR/USD 0.9708 USD/CAD 1.3840 EUR/CHF 0.9709 EUR/SEK 10.9835 EUR/NOK 10.4237 EUR/DKK 7.4391 USD/ILS 3.5756 AUD/USD 0.6276 NZD/USD 0.5568 USD/SGD 1.4384 USD/JPY 145.58 USD/CNH 7.1854 USD/INR 82.3988 EUR/ILS 3.4710 GBP/ILS 3.9474 USD/ZAR 18.1176
September provided another month of strong jobs data, with wage growth rising yet again. This has secured market expectations of a large hike by the BoE in November. Markets currently remain torn on whether the MPC will opt for a 100-bps or 125-bps hike. The government’s fiscal policy announcement on Halloween will weigh heavily on the minds of BoE officials.
The UK unemployment rate at 3.5% unexpectedly fell to the lowest since 1974 as people dropped out of the workforce at a record rate. The pound weakened following the report reflecting broader concerns about the health of UK public finances.EUR
Germany has changed it stance and agreed to support the joint issuance of European Union debt to cushion the blow of the energy crisis. This will aid the blocs struggling economies who face higher borrowing costs as the ECB raises interest rates. Germany has previously pushed back against these measures.
To tame the Italian bond market the ECB has utilised the flexibility from its Pandemic Emergency Purchase Programme. This has helped, however Italian Yields have still increased dramatically through 2022. One likely tool would be to allow the ECB to backstop Italian debt.USD
Biden has pledged further support to Ukraine, including advanced air defence systems following revenge strikes of key Ukrainian cities. Russian forces are allegedly running low on supplies following the strike on the Crimean bridge.
Globally stocks of chip producers have slipped following the US sanctions, preventing China from accessing these advanced technological components. The dollar spot index stabilised through today’s session above 113.ASIA/PACIFIC
Chinese lending may have risen last months as regulators coerce banks to expand credit, injecting stimulus into the market. Some Russian firms have turned to Hong Kong to finance operations, as sanctions weigh on their accessibility to western markets.
Australian confidence is hovering around historic lows, despite business conditions improving, reinforcing a divide between the experience of households and corporates in the economy. Consumer sentiment slipped to 83.7 highlighting the pessimism held by consumers.ILS
USDILS trades 0.5% higher through the Asian session near the 3.56 level.Data & Events
Italy Industrial Production
US NFIB Small Business Optimism
BOE Bailey Speaks
IMF published World Economic Outlook.
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