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Shifting expectations

Today's news headlines:

‘Bullard repeats call for Fed hikes, looks for return to normal’. The generally hawkish James Bullard, has called on his Federal Open Market Committee colleagues to continue their path of interest-rate hikes to a level that will restrict US economic growth. The St. Louis Fed President said that rates would need to reach at least 4.9% to put meaningful downward pressure on inflation before bringing policy to a more normal level in 2023. Bullard also warned financial markets not to underestimate the chance that policymakers will be more aggressive next year. Meanwhile, economists at Barclays have pushed back their estimates of a US recession and, with it, expect Fed officials to wait longer before cutting rates. (Bloomberg)


‘China economic activity falls as Covid cases surge to record’. China’s sensitivity to Covid outbreaks has caused activity to fall further in November, as the manufacturing PMI gauge fell to the lowest since April. Expectations are mounting for weaker growth following tighter Covid controls in several major cities, while the central bank has offered up more economic stimulus to try and spur recovery. A new approach to Covid zero is sorely needed as officials seek to strike a balance between boosting output and allowing the spread of the virus. (Bloomberg)


Today

The US Dollar has strengthened in the past 24hrs on more hawkish Fed sentiment, while investors eagerly anticipate Fed Chair Powell’s speech on the economy and labour market later today. However, an index of global stocks is on course for a second monthly advance, indicating better risk appetite following softer inflation data out of major economies.

 

Events

UK BRC Shop Price Index: 7.4% vs 6.6% previously
Aussie CPI: 6.9% vs 7.3% previously
Eurozone CPI and Core CPI Flash Estimate: 10.00AM
US ADP Non-Farm Employment Change: 1.15PM
US Prelim GDP: 1.30PM
US JOLTS Job Openings: 3.00PM
Fed Chair Powell Speaks: 6.30PM


Interbank rates*:

GBP/USD: 1.1962
GBP/EUR: 1.1551
EUR/USD: 1.0352
USD/CAD: 1.3565

 

Please contact your Dealer about any upcoming FX requirements you may have, or call +44 (0)20 3465 8200. 

*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.