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  • richard evans

Decision day for Fed

Good morning

US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place at the weekend.

In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.

This will be until Sunday 27th when we change our clocks in the UK

Ukraine President has sounded a little more upbeat on peace talks although as you know I fear we are a long way from any agreement. Russia do seem to having a harder time than perhaps they had imagined when their invasion of Ukraine began, perhaps this may make them more keen to find peace, my concern is that they resort to even more extreme measures to achieve their goals, leading to greater suffering.

Easy to ignore other news such as Covid. UK case numbers are creeping higher, the last seven days has seen almost 500,000 new cases, 120,000 of which were just yesterday. Do remember that this is with less testing taking place, the true number likely to be higher. However a rise in numbers is only to be expected given restrictions are lifted, the key numbers are number of hospital admissions. The last seven days has seen 10,300 new admissions, up from the previous seven days but still below the highs earlier this year and well below the peak in Jan 2021.

China is struggling to contain the latest Covid outbreak there, some thirty million people across 13 cities are in lockdown as the zero Covid policy comes under pressure from what is likely to be the highly transmissible Omicron variant.

To the currency markets, and we do have a decent calendar today with US retail sales coming before the Fed make their latest rate announcement later in the day. Of course the markets are currently more vulnerable to good/bad news out of Ukraine, however we must pay close attention to interest rates and economic data There is little doubt Fed will raise rates, question is really whether they do so by 25 or 50bps. 25bps looks more likely and if so I am not sure I’d expect to see a major move in USD, unless the press conference brings any particular surprises. The general feeling is 25bps this time and something of a commitment to regular increases in the coming months.

As I type, EURUSD is 1.0990, GBPUSD 1.3060 and EURGBP 0.8410 (GBPEUR 1.1890). EURJPY has ticked above 130.00 helped in no small part by a wave of positive sentiment that is pulling stocks higher. USDCAD is down at 1.2720 from a high yesterday of 1.2870 ahead of CAD inflation numbers this afternoon.

- 12.30 US retail sales

- 12.30 CAD CPI

- 14.00 US business inventories

- 15.45 Biden speaks

- 18.00 FOMC rate announcement

- 18.30 FOMC press conference

- 21.45 NZ GDP

- 00.30 AUS employment, RBA bulletin

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