US Inflation data prints the highest in decades, increasing the rate hike forecast to 4 hikes in 2022. Sterling continues its rally trading at levels not seen since October.
January 13, 2022
GBP/USD 1.3742 GBP/EUR 1.1979 EUR/USD 1.1471 USD/CAD 1.2477 EUR/CHF 1.0473 EUR/SEK 10.2290 EUR/NOK 9.9149 EUR/DKK 7.4402 USD/ILS 3.1089 AUD/USD 0.7308 NZD/USD 0.6877 USD/SGD 1.3447 USD/JPY 114.45 USD/CNH 6.3653 USD/INR 73.9075 EUR/ILS 3.5671 GBP/ILS 4.2708 USD/ZAR 15.2778
GBPSterling continues its recent rally, trading at levels not seen since 29th October. GPBUSD trades in the 1.3744 region as we print, up 1.23% since the start of the week.
The UK Foreign Secretary, Liz Truss enters the latest round of post-Brexit negotiations over Northern Ireland. Liz is facing a tough choice between picking a fight with the EU which would gain the support of the conservative party, or cutting a deal to prevent a trade war. Following the most recent government scandal, Truss has now also positioned herself as a potential successor to Boris Johnson.
Boris Johnson apologised for his recent scandal at the PMQs yesterday, however was hit by an onslaught of fury from opposition party leaders and fellow Tory party members, calling for his resignation. Support for the PM is now at all time lows and many people feel it is just a matter of time before he steps down.
The BOE's attempt to launch a digital currency hit some barriers, after the House of Lords raised concerns about the project.
The FTSE dips 0.18% since the open, as we print.EUREURUSD gained further over yesterday's session jumping as much as 1% following the US inflation print to sit in the 1.1472 region as we print. EURUSD trades up 1.08% this week. The euro also gained vs the pound over yesterday's session, sitting in the 0.8350 region as we print, down 0.06% since the start of the week.
With the French Election fast approaching in April, president Macron should now be focusing on the robust French economy as a way to win voters in the Spring. After a hasty crash early in the Covid-19 pandemic, France has recorded an incredible standout rebound, with output now reaching pre-crisis levels, ahead of many peers.
European stocks declined on the open with the Euro Stoxx, CAC and DAX dipping 0.09%, 0.32% and 0.39% respectively as we print.USDUS Inflation data prints the highest in decades, printing at 7%, the largest YoY gain since 1982, intensifying calls for rate increases. The dollar printed lower on the release with the Bloomberg Dollar Index trading now trading down 0.96% since yesterday's London open.
Fed member James Bullard now expects four 2022 hikes instead of his previously stated three. He believes it is better to start sooner rather than later to avoid having to be more aggressive if inflation does start to moderate towards the central bank's target of 2%. Investors now expect policy makers to raise interest rates at their March meeting and signal a shift toward shrinking the Fed’s $8.8 trillion balance sheet later in 2022.
US stocks rallied with the Dow Jones, S&P and NASDAQ gaining 0.11%, 0.28% and 0.23% respectively.
The US government is now looking to send medical teams to some of the worst hit states to help hospitals that are struggling to deal with the most recent outbreak.ASIA/PACIFICAsian stocks declined following the US inflation print, with the Nikkei, Hang Seng and CSI gaining 0.96%, 0.08% and 1.64% respectively as we print. Benchmark treasuries dipped, oil slipped and Bitcoin dropped below $44k.ILSIn the past two weeks, the spread of the Omicron variant, continued to cause a sharp decline in consumer credit card spending , despite the unsurprising increase in spending at pharmacies.
USDILS was mixed over yesterday's trading, reaching lows of 3.0979 following the US CPI print, however since recovered to sit in the 3.1087 region as we print, up 0.15% this week.Data & EventsUK - BOE Mann speaks
Italy - November industrial production
Eurozone - ECB Guindos speak, ECB Elderson speaks
US - US weekly initial jobless claims, Dec PPI
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