On high alert
Today's news headlines:
'ECB interest rates seen hitting peak of 3.25% before cut in July'. Interest rates in the Eurozone look likely to continue rising until the middle of the year, as the European Central Bank commits to a hawkish policy strategy to tame inflation. Although headline inflation appears to be peaking, policymakers remain focused on core CPI which is expected to peak at 5.1% in the first quarter. Analysts envisage a rate cut at the start of Q3, which would be a remarkable pivot given the central bank's current hawkish stance. (Bloomberg)
'BOJ opens "Pandora's box" for traders on alert for another shock'. The Bank of Japan will meet on Wednesday to deliver its latest monetary policy decision with markets primed for another surprise. If the central bank does act, another increase in the 10-year yield ceiling is in the realm of possibilities following the change in December. Still, the pressure is starting to show and whether such an ultra-loose monetary policy can last remains to be seen. With Governor Kuroda set to step down in April and inflation running at decade highs, speculation on a change in strategy under a new Governor is building. (Bloomberg)
European shares gained this morning as the risk rally continues to show momentum while US equity futures decline. The Dollar is flat this morning, hovering near the lowest levels since June, with oil prices lower in early trading.
German WPI MoM (Dec): -1.6% (est. -0.3%)
Bank of England Governor Andrew Bailey Speaks: 3:00PM
Bank of Canada Business Outlook Survey: 3:30PM
Australia Westpac Consumer Sentiment: 11:30PM
Eurogroup Meetings: All day
US Bank Holiday: All day
GBP/USD – 1.2190
GBP/EUR – 1.1276
EUR/USD – 1.0811
USD/CAD – 1.3415
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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.