US labour market expected to remain robust, BoE and ECB see rates rising, diverging from the Fed’s policy to downshift.
November 4, 2022
GBP/USD 1.1244 GBP/EUR 1.1488 EUR/USD 0.9788 USD/CAD 1.3633 EUR/CHF 0.9883 EUR/SEK 10.8777 EUR/NOK 10.2598 EUR/DKK 7.4429 USD/ILS 3.5631 AUD/USD 0.6362 NZD/USD 0.5835 USD/SGD 1.4153 USD/JPY 147.72 USD/CNH 7.2648 USD/INR 82.4638 EUR/ILS 3.4876 GBP/ILS 4.0064 USD/ZAR 18.2344
Yesterday, the Bank of England rose rates by 0.75% and signaled the UK is already in recession. The BoE’s Catherine Mann echoed earlier remarks by Andrew Bailey, reiterating that rates will continue rising should inflation accelerate further, though they may not rise as much as markets anticipate.
As a result of yesterday's events, GBPUSD trades 2% lower on Tuesday.EUR
The ECB warned the Spain’s push to raise taxes on banks does not consider the rising cost of credit risk. The levy on revenues could hit lenders that are already loss-making. Italy is set to present its budget update to the EU today.
Christine Lagarde has stated that there is “still a way to go” on raising interest rates. Meanwhile Kazaks said a peak rate is impossible to identify highlighting the uncertainty across European economies.USD
Today sees the release of US nonfarm payrolls data. The US economy is expected to add 195,000 jobs in October remaining robust amidst rapidly tightening financial conditions. The unemployment rate is expected to tick slightly higher, with hourly earnings growth slowing. This highlights a growing squeeze on households which may later spill into consumer spending activity.
A New York Fed experiment showed that a central bank digital currency could reduce the time taken to settle FX transactions from two-days to under 10 seconds.ASIA/PACIFIC
South Korea’s big brokerages will buy securities guaranteed by their smaller peers, as officials seek to ensure credit market stress doesn’t destabilise the financial sector.
The RBA increased its forecasts for inflation and wages growth, highlighting the risk of a price-wage spiral emerging among key reasons it expects to raise interest rates further. Headline inflation is now seen peaking at 8% this year.ILS
Netanyahu’s bloc won 64 of the 120 seats in the Knesset. Yair Lapid has congratulated the returning PM, and has said that he will ensure an orderly transition.
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