Fed officials reaffirm commitment to policy path hinting no interest rate cuts in 2023, ECB purchasing Italian debt to ease borrowing crisis.
October 6, 2022
GBP/USD 1.1361 GBP/EUR 1.1458 EUR/USD 0.9915 USD/CAD 1.3596 EUR/CHF 0.9700 EUR/SEK 10.8538 EUR/NOK 10.4030 EUR/DKK 7.4391 USD/ILS 3.5254 AUD/USD 0.6512 NZD/USD 0.5770 USD/SGD 1.4234 USD/JPY 144.56 USD/CNH 7.0397 USD/INR 81.7225 EUR/ILS 3.4954 GBP/ILS 4.0052 USD/ZAR 17.7699
Liz Truss addressed the conservative party conference yesterday, promising to get the country through the stormy days, and vowing to take on the “anti-growth coalition”. The speech included no new policy agenda, whilst reaffirming her commitment to cutting taxes and regulation on businesses.EUR
Italian Yield have increased dramatically this year, and with the ECB set to increase interest rates amid high inflation, the central bank could struggle to tame the country’s borrowing costs. The ECB has been rebalancing its balance sheet accordingly purchasing €8.5 billion of Italian debt, whilst selling €17.3 billion of German debt, highlighting the contrast in economic resilience across the bloc.
ECB minutes will be released today with markets watching closely to ascertain the telegraphed policy path. Markets are currently pricing in 70-bps of hikes at the October meeting later this month.USD
Federal reserve officials Bostic and Daly repeated the fed consensus that there is no plan to cut interest rates next year. EURUSD futures showed reduced expectations of 2023 cuts, however markets are still pricing in a fed pivot sometime next year.
The decision by OPEC to reduce production by 2million barrels has weighed on interest rate expectations globally. An increase in oil prices, could stoke inflation, therefore increasing the chances of a Federal Reserve pivot.ASIA/PACIFIC
Sri Lanka’s central bank held its lending rate at 15.5%. China and India have both been involved in co-ordinating Sri Lanka’s debt restructuring talks.
Indian and Indonesia debt has outperformed China, offering shelter from extreme volatility this year. The two countries sovereign debt has only lost 0.4% and 1.5% respectively, significantly less than other emerging markets in Asia.ILS
Israeli markets reopen today following the Yom Kippur holiday. Israel and Lebanon are close to striking a deal on maritime borders that could allow Israel to export gas to Europe, marking a rare instance of economic cooperation between the two nations.
USDILS trades 10-bps lower intraday. The cross has traded above 3.5 for 10-days now since market turmoil triggered by the UK bolstered dollar strength.Data & Events
Eurozone retail sales
US Jobless Claims
Germany Factory Orders
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