US consumer spending drives 2.9% expansion in Q4, Jeremey hunt says UK’s future prosperity can be found in Brexit freedoms, euro loses momentum against dollar.
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January 27, 2023
GBP/USD 1.2384 GBP/EUR 1.1376 EUR/USD 1.0886 USD/CAD 1.3325 EUR/CHF 1.0023 EUR/SEK 11.2013 EUR/NOK 10.7441 EUR/DKK 7.4377 USD/ILS 3.4363 AUD/USD 0.7116 NZD/USD 0.6498 USD/SGD 1.3134 USD/JPY 129.85 USD/CNH 6.7554 USD/INR 81.5438 EUR/ILS 3.7406 GBP/ILS 4.2554 USD/ZAR 17.2484
Jeremy Hunt will speak today at Bloomberg’s European headquarters in London – he is expected to reject calls to include tax cuts in his Spring Budget and will discuss the freedoms the UK has secured by leaving the EU that can be used to tackle economic activity.
The pound dipped during the Asia session to sit in the 1.2380 region vs the USD as we print, down 0.16% this week. GBPEUR further remained under pressure as the UK economy continues to deal with inflation remaining above 10% and strikes across multiple sectors. GBPEUR trades around 1.1370 as we print down 0.4% this week.
The FTSE has been mixed this week, with it gaining since the London open only to sit flat on the start of the week.EUR
The euro lost momentum against the Dollar on Thursday, dipping back below the 1.0900 figure to end its six-day winning streak, as strong US data boosted the greenback. Despite the decline, EURUSD trade up 0.2% on the week so far. European equity futures continued their rally, the Stoxx 50 traded 0.2% higher yesterday as a recovery in tech shares and the reopening of China buoyed sentiment.
French consumer confidence data printed below forecast, ticking slightly down on the previous month as morale continues to wane amid inflationary pressures. Spanish GDP beat expectations of 2.2% YoY growth, despite ongoing economic headwinds the release came in at 2.7% YoY.USD
US consumer spending on services drove a 2.9% GDP expansion in the fourth quarter, however when the volatile components are stripped out of the headline figure it showcases considerably milder growth. Overall, the US economy grew by 1% through 2022 surpassing previous expectations as the economy surprised to the upside the latter half of 2022.
December’s PCE deflator is likely to highlight strong disinflationary forces in the near-term, confirming the understanding from CPI and PPI. This will pave the way for the Fed to slow to 0.25% hikes in their meeting next week. Markets are currently pricing in an almost certain 0.25% hike.
The dollar has gained 0.15% today, although continues to trade below yesterday’s highs.ASIA/PACIFIC
Tokyo’s Jan CPI surprised to the upside yesterday which will only add fuel to the speculation that the BoJ will eventually relent and pivot on its monetary policy.
Japan and the Netherlands are set to join the US in limiting China’s access toa advanced semiconductor machinery.ILSUSDILS gained over 1.56% yesterday rising above 3.4, it has continued this uptrend through this morning now trading above 3.43.Data & Events
US PCE Deflator
US Personal Income, Spending
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