US CPI improves to 7.1%, supporting calls for less aggressive tightening from the Fed. The Dollar dropped 1.27% on the back of the print.
UK inflation eased this morning, suggesting the peak of the cost-of-living crisis may be over.
December 14, 2022
GBP/USD 1.2381 GBP/EUR 1.1615 EUR/USD 1.0660 USD/CAD 1.3543 EUR/CHF 0.9882 EUR/SEK 10.8603 EUR/NOK 10.3775 EUR/DKK 7.4386 USD/ILS 3.4039 AUD/USD 0.6867 NZD/USD 0.6448 USD/SGD 1.3460 USD/JPY 135.07 USD/CNH 6.9486 USD/INR 82.44 EUR/ILS 3.6291 GBP/ILS 4.2125 USD/ZAR 17.1293
A wave of industrial action gripping the UK strengthens today as Royal Mail workers go on strike alongside rail industry staff over pay and employment terms. Tomorrow will mark the first Nationwide NHS nurses strike over pay.
UK inflation eases indicating that the worse of the cost-of-living squeeze is over – the CPI print for November came in this morning at 10.7%, a decline from last month’s 11.1% print and lower than the expected 10.9%. This slowdown will be welcomed by households however will likely not do much to alter the BOE’s interest rate plans, as officials expect inflation to stay well above the 2% target into 2024.
Sterling rallied vs USD following US CPI print, hitting highs of 1.2444, however has since recovered and sits up 0.91% since the start of the week at 1.2369 as we print.EUR
EURUSD reached a 5 month high yesterday, hitting a high of 1.0668 following US CPI data. The pair continues to trade comfortably above the 1.0600 level this morning as investor focus shifts to both the Fed and ECB meetings this week.
Investor sentiment from Germany improved to the highest level since the outbreak of the Russia/Ukraine war. Although still in recession territory, the print rebounded from November, lessening concerns over a severe recession.
European stocks eased this morning ahead of todays Fed policy decision. The Stoxx 600 index dropped 0.4%, with all sectors in the red other than energy and utility shares.USD
Fed policymakers are set to raise benchmark policy rates by half a percentage point today, breaking successive 75bp interest rate increases. Yesterday’s inflation print came in better than expected at 7.1% and provides support for Jerome Powell to moderate the Fed’s aggressive tightening pace - Swap market pricing points to a 25-bp move in February and a peak rate of around 4.85%.
The USD dipped on the print with the DXY dropping as much as 1.27% before recovering slightly. Equities gained with the Dow Jones, S&P and NASDAQ gaining 0.3%, 0.73% and 1.01% respectively, as investors become more confident about the economic outlook.
The US will send Patriot air defense missiles to Ukraine pending Joe Biden's final approval.ASIA/PACIFICBank of Japan officials have said that they may review policy next year, after looking closely at wage growth and other economic factors. The review is like come after the end of Governor Kuroda's decade-long term.
China's u-turn on Covid policy is increasing concerns of a natural gas shortage to Europe and other Asian nations. China's gas imports are likely to be 7% higher in 2023, adding pressure to Europe who prepare for winter with little or no natural gas supply from Russia.ILSUSDILS dropped briefly below the 3.4000 level yesterday following US inflation data. The pair recovered over the afternoon to trade 0.75% higher this morning at 3.4100.Data & EventsUK - Inflation
Euro Area - Industrial Production
US - MBA Mortgage Applications
Fed Interest Rate Decision
Fed Press Conference
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