Global equities decline following hawkish Fed meeting minutes. UK inflation concerns hit the highest on record for UK businesses.
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January 6, 2022
GBP/USD 1.3500 GBP/EUR 1.1955 EUR/USD 1.1292 USD/CAD 1.2803 EUR/CHF 1.03837 EUR/SEK 10.3393 EUR/NOK 10.0677 EUR/DKK 7.4384 USD/ILS 3.1200 AUD/USD 0.7149 NZD/USD 0.674 USD/SGD 1.3611 USD/JPY 115.77 USD/CNH 6.3827 USD/INR 74.45 EUR/ILS 3.5227 GBP/ILS 4.209 USD/ZAR 15.8585
GBPAfter reaching highs of 1.3599, GBPUSD dipped following the release of December's Fed meeting minutes. GBPUSD has dipped 0.75% from those highs to trade in the 1.3496 region as we print, down 0.28% this week. GBPEUR was mixed over yesterday's session dipping to lows of 1.1944 before rebounding in the US session. GBPEUR trades in the 1.1945 region as we print up 0.3% this week.
Record number of UK businesses are concerned about inflation and are planning to rise prices, a recent poll by the British Commerce of Chambers has found. This suggests increases in the cost of living may not be over just yet. Almost 60% of companies expect to boost prices in the next three months.
Jacob Rees-Mogg called for the scrapping of the panned £12 billion rise in National Insurance (NI) at yesterday's cabinet meeting - the proposed rise in NI is to be introduced in April to help fund the health and social care, however the conservative MP expressed his concerns about the looming cost of living crunch. Rishi Sunak rejected the idea.
The FTSE dips 1% on the open.EUREURUSD reached highs of 1.1346 before retreating to trade in the 1.1294 region as we print, down 0.65% this week. EURGBP was mixed over yesterday's session and trades down 0.3% this week.
Germany factory orders rose 3.7% mom in November, better than the expectation of 2.5% mom. The strong growth in new orders was attributable to foreign orders which increased by 8.0%.
Italy made vaccination compulsory for people over the age of 50 and made further cuts to what the unvaccinated people can do.
European equities dip on the open with the Eurostoxx 50, CAC and DAX falling 1.18%, 1.07% and 0.9% respectively as we go to print.USDFed minutes out last night showed that officials mulled over earlier and faster rate hikes than initially anticipated due to rising inflation. Some officials called for the balance sheet to be reduced soon after rising rates. Fed officials also expressed concern over the rising rate of infections and how this will effect economic activity and supply issues. Overnight swaps markets now price in a 80% chance of a 25bp hike in March, opening the door to a potential four rate hikes in 2022.
The USD gained on the minutes being released, with GBPUSD dipping 0.76% off Wednesday highs, whilst EURUSD dipped 0.51% off highs.
US equities dipped as the hawkish views from the Fed accelerated a dip in tech shares, with the Dow Jones, S&P and NASDAQ falling 1.07%, 1.94% and 3.34% respectively. Benchmark treasury yields rose holding near April highs.ASIA/PACIFICAsian equities dipped following the US, as the hawkish views from the Fed accelerated a dip in tech shares, with the Nikkei and CSI 300 falling 2.88% and 1.02% respectively whilst the Hang Seng gained 0.72%. Bitcoin hovered around $43k whilst oil fell for the first time in four days.
China brought in new restrictions for visitors from the US whilst Australia and Thailand further tightened curbs due to the rise in Omicron cases.ILSThe spread of the Omicron variant led in the last two weeks to a sharp decline across the board in consumers’ credit card spending, however an encouraging indicator on the state of the economy in December came in the form of Hapoalim’s CCI, which rose slightly during the month.
USDILS gained last last night following the release of the Federal Reserve's December meeting minutes. USDILS now sits in the 3.1220 region as we print up 0.6% so far this week.Data & EventsGermany - Dec factory orders, CPI
Hungary - PPI, central bank 1 week deposit rate
UK - new car registrations, Dec Markit services, Composite PMIs
Euro Area - PMIs
US - Trade balance, weekly jobless claims
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