Today's news headlines:

‘Biden Says US Recession Avoidable After Call With Summers’. White House officials and congressional Democrats are in talks over legislation which aims to fight inflation, but President Biden has reiterated that a US recession can be avoided. The president held a call with former Treasury Secretary Larry Summers, who sees a chance that the country will find itself battling with stagflation. Summers has previously questioned the credibility of the Federal Reserve for failing to recognise its mistakes on inflation calls. Meanwhile, economists at Goldman Sachs have put the chance of a US recession in the next year at 30%. (Bloomberg)

‘UK Rail Strikes Get Under Way After Unions Reject Late Offer’. Yesterday, late negotiations to avoid the biggest rail strike in three decades failed, bringing the UK to a near standstill. With only about 20% of services running, it could cost the UK economy almost £100 million, according to the Centre for Economics and Business Research, increasing the chance of a technical recession. Boris Johnson warned that ‘too high demands on pay’ will make it difficult for the UK to rein in inflation and stop expectations becoming entrenched. (Bloomberg)

Today

Markets found reprieve overnight following President Biden’s comments on inflation, with most Asian equity benchmarks rising along with US and European futures. Sterling was supported by comments from the Bank of England’s Catherine Mann, who advocated aggressive interest rate hikes for the UK. Meanwhile, Coal threatened to post new record highs with governments around the world embracing the ‘dirtiest fuel’ as an alternative to Russian natural gas.

Events

Monetary Policy Committee member Huw Pill speaks: 8:30AM
Canadian Retail and Core Retail Sales: 1:30PM
US Existing Home Sales: 3:00PM
US FOMC member Loretta Mester speaks: 5:00PM

Interbank rates:

​​​​​​​GBP/USD — 1.2295
GBP/EUR — 1.1655
EUR/USD — 1.0550
USD/CAD — 1.2915

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