A precarious position

Today's news headlines:

‘Sunak Pledges UK Tax Cuts as Johnson Seeks to Move On From Vote’. The UK’s Chancellor will outline a range of tax cuts in his autumn budget as he tries to appease disgruntled Conservative MPs who almost ousted PM Johnson this week. Rishi Sunak has overseen Britain’s tax burden climbing to its highest level since the 1950s, which has become a recurring gripe of many Tory backbenchers. Johnson’s government is in the precarious position of trying to balance the books post-pandemic while attempting to alleviate the UK’s cost-of-living crisis and deliver his ‘levelling up’ agenda. (Bloomberg)

‘Japan Economy Contracts Less Than Thought as Recovery Begins’. The Japanese economic recovery from the Covid-19 pandemic started to gain traction at the end of the first quarter, meaning better-than-expected growth. Analysts are predicting that the economy will return to modest growth in the current quarter as consumers regain confidence. Still, concerns remain over cost-push inflation exacerbated by a sliding currency. Meanwhile, the Bank of Japan is holding firm with its dovish policy while its central bank peers are raising rates, exacerbating yield differentials and causing downward pressure on the Yen. (Bloomberg)


Today

Asian equities mostly rose overnight, led by the Hang Seng tech index, which jumped more than 4%. European equity futures gained, although sentiment remains fragile on concerns that interest rates will need to go higher to combat inflation, stifling growth in the process. The Bloomberg Commodity Spot Index is at a record high, underlining price pressures.  

Events

Japan Final GDP q/q: -0.1% vs -0.2% previously
Japan Economy Watchers Sentiment: 54.0 vs 50.4 previously 
German Industrial Production m/m: 0.7% vs -3.7% previously
Eurozone Revised GDP q/q: 10.00am

Interbank rates:

​​​​​​​GBPUSD: 1.2564
GBPEUR: 1.1759
EURUSD: 1.0685
USDCAD: 1.2541

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