Today's news headlines:
‘UK’s Kwarteng to bring forward fiscal plan to calm markets’. The government’s massive fiscal plan, which is sorely lacking in credibility, will be fleshed out earlier than originally thought in an attempt to appease markets. Chancellor Kwasi Kwarteng has been under pressure to justify his economic strategy with independent OBR forecasts. Markets are looking for the government to show fiscal sustainability instead of a series of unfunded tax cuts, with markets rattled at the prospect of extra borrowing with interest rates on the rise. (Bloomberg)
‘Williams says Fed policy not restrictive, still has ways to go’. The Federal Reserve, which has already raised rates at its previous five meetings, is set to continue its hiking path, which could see rates at 4.6% by the end of next year. Fed Bank of New York President John Williams commented that policy is not yet in a restrictive place for growth, but markets have sold off in recent months as investors fear a looming recession. Williams conceded that the Fed would be guided by the data but that their primary concern was bringing inflation back down to 2% from multi-decade highs. (Bloomberg)
Investors have cooled bets on the pace of monetary policy tightening from major central banks, delivering a boost to asset prices and currencies against the Dollar. Equity futures in the US and Europe were higher this morning as money markets priced 125bps of Fed hikes into March 2023, down from 165bps in recent weeks.
AUD RBA Cash Rate: 2.60% vs 2.35% previously
FOMC Member Williams speaks: 2.00pm
FOMC Member Mester speaks: 2.15pm
US JOLTS Job Openings: 3.00pm
ECB President Lagarde speaks: 4.00pm
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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.