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
Trading in financial instruments may involve a high degree of risk and may not be suitable for all investors. Trading in financial instruments can result in both loss and profit. Investors should carefully consider whether financial instruments suit their needs, financial resources and personal circumstances.
The information contained in this material is solely for informational purposes only and it is not and should not be construed as an offer or a solicitation of an offer to buy or sell any financial instruments and cannot be relied upon as a representation that any particular transaction necessarily could have been or can be effected at the stated prices. This material does not contrue advice.
For more analysis on FX markets or information regarding SVB's FX services:
0800 023 1440 from within the UK
+44 207 367 7880 from overseas
See all of SVB's latest FX information and commentary.
© 2023 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB).
Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department of Business Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Silicon Valley Bank is a subsidiary of SVB Financial Group, a Delaware corporation and is an affiliate of SVB Financial Group UK Limited. SVB Financial Group UK Ltd is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. 5572575 and is authorised and regulated by the Financial Conduct Authority, with reference number 446159. SVB Financial Group and its subsidiary Silicon Valley Bank are members of the Federal Reserve System and Silicon Valley Bank is a member of the FDIC.
Your eligible deposits with Silicon Valley Bank UK are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered. Please click here for further information or visit http://www.fscs.org.uk. For more detailed information about coverage and limits, please review our FSCS Information Sheet at http://www.fscs.org.uk.
This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources. Opinions expressed are our opinions as of the date of this content only. The material is based upon information which we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such.