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  • richard evans

US dollar higher ahead of Powell's testimony, UK inflation remains buoyant

Good morning

Another quiet day in the world of currencies yesterday although lower risk sentiment overnight has seen US dollar push higher, GBPUSD now down at 1.2180, EURUSD at 1.0475. Headline UK inflation came in at 9,1%, pretty much as expected, although the core reading, excluding energy and food, slipped a touch lower to 5.9%. EURGBP is up at 0.8615 as I type, (GBPEUR 1.1605), well off GBP’s recent highs

In the US, Goldman Sachs has put the chances of a recession next year at 30%, but forecasters still see Fed raising rates quickly, 75bps in July and 50bps in Sept. They do need to combat inflation but I also feel they want rates high so they can have room to reduce them if necessary.

Feds Powell delivers his semi-annual testimony to the Senate today and is likely to be asked about rates, inflation, and perhaps whether the Fed were well behind the curve when it came to taming inflation. Watch for any talk of the potential for a 1% rate rise. Meanwhile Biden speaks later this evening, it is expected he will cut tax on gasoline as prices continue to surge.

The push higher in USD has led USDJPY to new highs, hitting 136.70 overnight. We did have the BoJ minutes but they didn’t really offer anything of interest.

Gold prices are holding up well given the rally in USD, currently $1827/oz, while Bitcoin continues to struggle, sitting at just a touch over $20,000.

EU leaders meet tomorrow, not sure what the agenda is although I am sure Ukraine will be high up there. A lot has been said recently about the risk of Russia completely cutting off gas supplies this winter, plenty of talk about the likes of Italy and Germany stockpiling gas.

On this day, 36 years ago, we witnessed two of the most memorable sporting moments in history. The first was Maradonas ‘hand of god’ goal against England in the 1986 world cup, the second was in the same match, possibly the greatest world cup goal of all time when Maradona took on almost the entire England team from inside his own half all the way to Englands six yard box, where he duly tucked the ball away to score Argentinas second and put England out. It still hurts now.

- 09.40 BoEs Cunliffe speaks

- 13.30 CAD CPI

- 14.00 SNB quarterly bulletin

- 14.30 Feds Powell speaks

- 15.00 EU consumer confidence

- 15.40 BoCs Rogers speaks

- 19.00 Biden sepaks

- 23.00 AUS S&P manufacturing, services PMI

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