Tough times ahead

Today's news headlines:

‘Growth in UK business activity falls to 15-month low, fuelling recession risk’. Growth in the UK's services and manufacturing activity has dropped to the lowest since January 2021, when the nation was in complete lockdown. Sky-high inflation has exacerbated the cost-of-living crisis, and Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, commented that the survey results ‘point to the economy almost grinding to a halt’. Sterling fell 0.8% on the news as the economy looks set to worsen after contracting by 0.1% in March. (Financial Times)

‘ECB Battle Lines Shift With Lagarde Urged to Speed Up Rate Hikes’. A few weeks ago, policymakers at the European Central Bank had only started to consider a July interest-rate hike openly. Now, it's discussing the idea of a 50bps hike with the view to end negative rates by Q3 this year. Three policymakers have now mooted a half-point move; however, president Lagarde has signalled quarter-point moves in July and September. It remains to be seen whether the inflation shock hitting the Eurozone is demand-driven or being fuelled by the supply side of the economy. (Bloomberg)


Today

Stocks in Asia crept higher overnight, while US and European equity futures gained as participants mulled the prospect of less monetary policy tightening in the US. Meanwhile, the New Zealand Dollar gained after the RBNZ raised interest rates by half a percentage point for the second meeting straight.

Events

Reserve Bank of New Zealand Cash Rate: 2.00% vs 1.50% previously
RBNZ Monetary Policy Statement: 3:00AM
RBNZ Press Conference: 3:00AM
German Gfk Consumer Climate: 26.0 vs -26.6 previously
European Central Bank President Christine Lagarde speaks: 9:00AM
Bank of Japan Governor Kuroda speaks: 12:05PM
US Durable and Core Durable Goods: 1:30PM
Federal Open Market Committee meeting minutes: 7:00PM

Interbank rates:

​​​​​​​
GBP/USD – 1.2545
GBP/EUR – 1.1735
EUR/USD – 1.0685
USD/CAD – 1.2830

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