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UK Chancellor takes centre stage with autumn statement

Good morning

US retail sales came out stronger than expected yesterday which sent USD marching higher. Those gains had been mostly reversed by the London close, not helped and the US dollar is now showing renewed signs of weakness, GBPUSD at 1.1950 and EURUSD 1.0400. GBP is benefitting more, GBPEUR is up to 1.1500, EUR underperforming perhaps as a result of an article suggesting we could see a smaller 50bps rate rise from ECB when it meets next month.

Feds Waller has said that recent data has made him more comfortable with a 50bps rate rise in December although did make it clear more rate rises will be seen in 2023 with the actiual peak highly dependent on inflation data.

Sometime before midday we should hear from Chancellor Hunt who is likely to cut spending and raise taxes as part of his Autumn statement. We could potentially see some volatility in the markets as Hunt tries to restore UKs reputation. GBP is performing well but remains vulnerable to shocks and many seem to be taking this recent spate of strength as an opportunity to sell. Lets see what Hunt has to say, in addition we have UK retail sales early tomorrow morning where the hope is a slightly better set of numbers than we saw last time, which were partly overshadowed by UKs political turmoil at the time and Truss’s resignation.

China President Xi was caught on camera berating Canada PM Trudeau for leaking details from a recent meeting between the two of them to the media. Xi said it was inappropriate before cutting Trudeau off and walking away. The two countries haven’t got on well since Canada arrested Huawei’s Wanzhou and China arrested two Canadians in retaliation back in 2018. It is rare to see two leaders having a disagreement. USDCNY is higher and China stocks have given up gains this week on some concern over liquidity in China bonds after a large sell-off. These concerns are partially offset by reports that China will accelerate Covid vaccinations, I’m not sure if these are the western versions Xi and Scholz discussed recently.

- 10.00 EU CPI, HICP

- 11.30 Chancellor Hunt speaks

- 13.30 US building permits, housing starts, initial jobless claims

- 14.15 Feds Bowman speaks

- 15.40 Feds Jefferson speaks

- 23.30 Japan CPI

- 07.00 UK retail sales

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