Today's news headlines:

‘Rishi Sunak and Penny Mordaunt become frontrunners in Tory leadership race’. After starting with a comically long list of candidates for Number 10, the frontrunners have been whittled down to Rishi Sunak and Penny Mordaunt, who received 88 and 67 votes in the first round, respectively. Four more candidates received the required 30 votes to remain in the running. Still, the former Chancellor and current Minister of Trade are sufficiently ahead of the others to make them probable winners. (Financial Times)

‘Soaring inflation puts pressure on Fed to abandon guidance again’. The latest US inflation print shows inflation escalating to 9.1%, putting renewed pressure on the Federal Reserve to drop its so-called Forward Guidance approach, which attempts to signal the dimensions of its future policy decision-making. Markets are now betting that the Federal Open Market Committee will raise interest rates by a full percentage point in its next meeting. Many practitioners now feel that it would be more productive for the Fed to signal that each meeting is an independent event and refuse to forecast policy decisions. (Financial Times)

Today

The US Dollar Index made incremental gains overnight, while Brent crude settled towards the 200-day moving average at $97 per barrel. Both Sterling and Euro are settling near trade-weighted lows like anchors on a seabed. Bank of England Credit Conditions Survey is firmly in our sights today.

Events

UK  Royal Institutions of Chartered Surveyors House Price Balance 65% vs 72% last month
AU  Employment Change 88.4k vs 60.6k last month
AU  Employment Rate  3.5% vs 3.9% last month
UK  Bank of England Credit Conditions Survey  9:30AM
US  Producer Price Index m/m  1:30PM
US Unemployment Claims 1:30PM
US Federal Open Market Committee member Waller speaks 4:00PM

Interbank rates:

GBP/USD – 1.1840
GBP/EUR – 1.1825
EUR/USD – 1.0005
USD/CAD – 1.3015

The markets are moving. To speak to our team, please call +44 (0)20 3465 8200.