Markets await FOMC

Good morning

The UK government did manage to get its Covid passports votes through despite 100 or so Tory MPs voting against it. It was the biggest rebellion of Johnson tenure to date. GBP was hardly affected and indeed is higher after this mornings inflation data, GBPUSD up to 1.3270 and EURGBP at 0.8495 (GBPEUR 1.1770). The Times shadow MPC say BoE should raise rates tomorrow before any spread of Omicron pushes inflation higher still. The annual reading of 5.1% was higher than the 4.7% expected, and is the highest for over ten years

A sneak preview of ECBs own forecasts shows inflation below 2% through both 2023 and 2024. EURUSD slips to the lower end of recent ranges around 1.1270.

China retail sales came out below expectations overnight, but industrial production numbers did beat expectations. Moodys have said to expect more bond defaults by Chinese firms. Meanwhile US pass a bill that bans imports from Chinas Xinjiang region unless it is certain they were not produced with forced labour. That won’t please China.

USDCAD continues to push higher ahead of inflation numbers today, the pair now 1.2865, highest levels since Sept.

Highlight of the day will certainly be the FOMC rate meeting where it is thought the Fed will announce a faster pace of tapering, to end asset purchases by March 2022. This would raise the possibility of a rate rise on June next year, with some thinking we could now see three rises of 25bps each through 2022.

Sorry, not the most informative daily report, I’m running late so I’m going to have to leave it there for now. Feel free to call if you need anything specific.

- 13.15 CAD housing starts

- 13.30 US retail sales, NY state manufacturing index

- 13.30 CAD CPI

- 15.00 US business inventories

- 17.00 BoCs Macklem speaks

- 19.00 FOMC rate announcement

- 19.30 FOMC press conference

- 21.45 NZ GDP

- 23.30 RBAs Lowe speaks

- 23.50 Japan trade balance

- 00.00 AUS consumer inflation expectations

- 00.30 AUS unemployment