A seismic shift
Today's news headlines:
'UK house prices set to drop 10% or more in 2023, economists say'. The outlook for UK consumers is getting worse, as economists weigh the effects of rising interest rates and a deepening recession on the property market. While the drop in prices is unlikely to top the 16% seen in the Global Financial Crisis, we are almost certain to see the first annual fall in a decade. The scale of the decline will hinge on the strength of the UK's labour market, as a jump in unemployment figures would force sales at a time when demand is falling. With risks tilted to the downside, it will certainly be one area to watch closely in 2023. (Bloomberg)
'Yen surges as Kuroda's yield cap shock sparks normalization bets'. The era of negative rates is drawing to a close after Japan's central bank lifted a cap on 10-year yields, paving the way for policy normalization. The prospect of a rate hike in 2023 sent the Yen surging, as it climbed more than 3.5% against the Dollar following the announcement. The BOJ's Governor Kuroda commented that 'Japan's economy has steadily improved and is no longer in a state of deflation'. Many economists took the move as a precursor for exiting a decade of extraordinary monetary stimulus in Japan. (Bloomberg)
Stocks in the US closed higher for the first time in four sessions yesterday, paving the way for European stocks to follow suit as equity futures were higher this morning. The shift in risk appetite is surprising considering the surprise move by the BOJ and softer US housing market data released yesterday.
German Gfk Consumer Climate: -37.8 vs -40.1 previously
UK Public Sector Net Borrowing: 21.2B vs 13.4B previously
Canada CPI: 1.30PM
US CB Consumer Climate: 3.00PM
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*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.