Powell’s Put:
Jay Powell, Chair of the Federal Reserve in the United States, has reignited the debate of monetary policy within the world’s dominant currency. The US Dollar has faced a considerable headwind following the speech by the Reserve bank chief. The Dollar has given back ground to an appreciating Euro, with EURUSD dropping a 1.12 handle to trade in the high 1.13s throughout the day. The pair briefly broke 1.14 at 13:30 UK time, however, found considerable resistance, retreating back to the middle of its intraday range. Yesterday evening’s speech by the relatively new central bank chairman need not have signalled the Reserve’s intention with respect to monetary policy given the planned orientation of the speech. However, highlighting the present policy rate band (2.00-2.25%) as very close to the neutral rate led investors to question how much further the Fed was prepared to go. With a rate hike priced in for December to a considerable degree, markets immediately priced out 2019 rate rises, leaving only one firm policy change for the whole of 2019. The sudden reaction to Powell’s words led to a concomitant sell off in the underlying Dollar, however, did offer considerable scope for equity markets to rally. The Pound has failed to catch a bid today as May’s parliamentary position continued to appear weak. Labour is rumoured to be considering a second referendum if May’s Brexit bill is defeated in the House of Commons on December 11th. Tomorrow, Eurozone price and output data will be read with particular attention on Italy, providing considerable risk within the European single currency.
Today’s Global Market:
Discussion and Analysis by Charles Porter
Will they, won’t they It’s one week to the day until the next Bank of England decision. It will prove critical to the value of GBP and perhaps prove to be a defining feature of the currency market for at least the first quarter of this calendar year. Bank rate in the UK currently sits […]
Inflation With markets as ever getting ahead of themselves by many having decided that the inflation peak is a yesterday thing, there is a dawning realisation that with the current levels of USA 6.5%, 9.2% UK and 10.4% EU as at Dec 2022, inflation is not only well above target of 2% but is still […]
UK Government Borrowing By Numbers Many people have a disconnect when it comes to linking government finances with their own-bring on the idea of teaching finance as part of the school curriculum-however, yesterday’s release showing the government borrowing figures fall into the category of both attention grabbing but so eye watering that many will likely […]