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  • richard evans

US rate rise expectations brought forward

Good morning

Equities were generally flat yesterday except for China stocks which took a bit of a tumble, possibly not helped by China authorities telling the Evergrande boss to use his own personal wealth to pay off the company debt. I ‘m not sure he is wealthy enough to really help the $300billion debt, but it’s a signal from China that they do not expect bosses to become rich from failing companies. It may also suggest China government are unwilling to help out. To add to China market woes, US is banning China Telecom from operating in the US.

US rate rise expectations are on the move. I saw one bank this morning who has brought forward their first expected Fed move from Sept 2023 to Q4 2022, quite a significant change.

Oil prices remain firm as Cushing inventories suggest a draw from oil reserves. EIA oil reserve data is out this afternoon, I’ve added it to the calendar given its significance.

Canada rate announcement later this afternoon. USDCAD currently just below 1.2400, no policy changes expected but I’m thinking we could see a mildly hawkish BoC, but I am sure they will be careful with their comments to limit CAD upside.

AUD has made gains after its CPI release was in line with expectations, with one release, the trimmed mean CPI, beating expectations. AUDUSD traded up to 0.7535, AUDNZD to 1.0515, both a a few pips lower than that but this data is certainly encouragement for those who think RBA are too dovish at the moment.

UK budget today, I won’t go into what is expected, the UK press will do a better job of that than me, but safe to assume there will be some tax rises along with some increase in minimum pay rates.

GBPUSD currently 1.3760, EURUSD 1.1605 which leaves EURGBP 0.8435 (GBPEUR 1.1855). I’ve seen a bit of interest in downside GBPUSD this morning, interesting given the market expectations of a UK rate rise next month.

I’ll leave it there. I’m out and about for much of the next few days seeing as the kids are home. They do seem to have enough plans of their own that don’t include my wife and I but that won’t stop us dragging them out when we get the chance.

- 12.30 UK budget speech

- 13.30 US durable goods orders

- 15.00 BoC rate announcement

- 15.30 US crude oil stocks

- 16.15 BoC press conference

- 00.50 Japan retail trade

- 04.00 BoJ rate announcement

- 07.00 BoJ press conference

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