US CPI expected to moderate with core prices gaining still, UK unemployment reaches lowest level since 1974, as UK set to enter technical recession. Gas prices fall for third consecutive day.
September 13, 2022
GBP/USD 1.1724 GBP/EUR 1.1556 EUR/USD 1.0146 USD/CAD 1.2972 EUR/CHF 0.9644 EUR/SEK 10.6121 EUR/NOK 9.9755 EUR/DKK 7.4364 USD/ILS 3.3502 AUD/USD 0.6888 NZD/USD 0.6140 USD/SGD 1.3942 USD/JPY 142.30 USD/CNH 6.9269 USD/INR 79.1363 EUR/ILS 3.3990 GBP/ILS 3.9278 USD/ZAR 17.0392
UK labour data will likely provide plenty of support for hawks at the Bank of England. The Jobless rate is sitting well below what is sustainable. A 50-bps hike in September remains the base case, however robust jobs data has lifted the chances of a 75-bps hike. Unemployment fell to 3.6% from 3.8% in the previous three months, the lowest since 1974.
The UK is expected to enter a technical recession following additional bank holidays, and a decline in output following the death of HM Queen Elizabeth II. GDP is expected to return to normal levels from October, and the government’s energy support package could stave off recession through the WinterEUR
Natural gas prices have fallen for the third consecutive day, as the EU pushes ahead with plans to intervene in energy markets, amid the worst energy crisis in decades. The EC president Von der Leyen is set to present her five-point-plan, to curb power consumption and provide liquidity.
Brussels have offered to slash physical trade checks in the Irish Sea in the hope of breaking the deadlock, Marcos Sefcovic, said his plan would create an “invisible” trade border, but required the EC being granted access to UK trade databases.
The euro benefitted from dollar weakness yesterday, with EURUSD gaining 1.5%, since yesterday morning.USD
Plunging gasoline prices may be the core driver behind any decrease seen in August’s CPI print. The fight against inflation isn’t over as the tight labour market, and lacklustre productivity might sustain core inflation. Currently, forecasts see core inflation remaining well above the Fed’s target for some time. Inflation is expected to decelerate down to 8.1% from 8.5% prior.
Some see a soft landing by the Federal reserve becoming the more likely scenario for the global economy, aided by Chinese stimulus, energy intervention in Europe, and low investor sentiment.
Yesterday saw a dollar correction, with the dollar spot index falling by -1.4%, as risk-on sentiment builds in the market.ASIA/PACIFIC
The pickup in India’s inflation through August, sees the expectation hat the Reserve bank will hike rates twice more this year in an attempt to dampen price pressures. Inflation climbed to 7% YoY from 6.7% in July.
Japan’s accelerating PPI in august may suggest a squeeze on profit margins therefore seeing higher costs passed onto consumers underpinning gaining CPI in Q3. PPI climbed 9.0% YoY,ILS
Israel sees adding as much as $12 billion to the sovereign fund by 2032. USDILS slipped away from 3.4 levels this week, due to dollar depreciation, trading -1.6% lower.Data & Events
Germany ZEW Survey
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