Daily Market Update 23/08/2022

“Mounting concerns over the European energy supplies sided with tougher expectations on rate hikes are weighting on risk appetite across the Eurozone – ECB rate-settlers have signalled another half percentage rate increase is likely at its meeting on September 8.”

Main Headlines

Ford Motor plans to shed 3,000 employees and contract workers, citing a need to reshape its labour force as it invests tens of billions of dollars to make electric vehicles. The company plans to cut 2,000 salaried employees and terminate another 1,000 contract workers, according to an internal memo on Monday from chief executive Jim Farley and executive chair Bill Ford. The cuts, while spread across the US, Canada and India, will be concentrated around the carmaker’s headquarters in south-east Michigan. The executives called Ford’s cost structure “uncompetitive” compared to other carmakers, both legacy producers of and upstarts in the fast-growing EV market.

Liz Truss is planning to take emergency action to address the cost-of-living crisis without an accompanying economic forecast soon after becoming prime minister. Even though the Office for Budget Responsibility has let it be known it is ready to provide forecasts to inform the new prime minister’s thinking when elected on September 5, the frontrunner in the Conservative party leadership race is set to decline the offer. Instead, Truss will include tax cuts, the elimination of green levies from energy bills and some targeted support for the vulnerable in an announcement that will be modelled on a statement made by fellow leadership contender Rishi Sunak.

Markets

US index futures edged higher, Treasuries nursed losses and the dollar was steady as markets remained on edge ahead of the Jackson Hole central bankers’ symposium later this week. Futures on the S&P 500 and Nasdaq 100 fluctuated before turning higher after US stocks plunged the most in two months on Monday. The 10-year Treasury yield held above 3% and a gauge of the dollar hovered at a five-week high. Traders are bracing for hawkish talk at the Jackson Hole event later after recent comments from Federal Reserve officials that convinced some market participants the central bank will continue to tighten aggressively into a slowing economy.

GBP

Sterling is stronger against euro and weaker against the dollar this morning. The Office for National Statistics said it had revised down annual volume GDP growth in 2020 by 1.7 percentage points, meaning that it fell by 11 per cent, the largest in more than 300 years and the worst recorded among G7 countries. According to a report from Citigroup, surging wholesale gas prices are putting the UK on a path to exceed 18 per cent inflation next year, the highest rate among larger western economies. Some 26 EasyJet flights in and out of Gatwick have been cancelled at short notice, with the airport blaming staff sickness.

EUR

Euro is weaker than most major currencies in the early morning trade. Business activity across the euro zone contracted for a second straight month in August as the cost-of-living crisis forced consumers to curtail spending while supply constraints continued to hurt manufacturers. Swedish home prices continued to fall last month as the surging cost of living threatens to upend what has been one of Europe’s hottest housing markets. A total of 33 cargo ships carrying around 719,549 tonnes of foodstuffs have left Ukraine under a deal brokered by the United Nations and Turkey to unblock Ukrainian sea ports.

USD

The dollar is well bid against most major currencies overnight. More than 15,400 cases of monkeypox have been reported in the US, according to data from the Centers for Disease Control and Prevention. It’s the highest total of any country. States that report the most cases include California, Texas, Florida, Georgia, New York and Illinois. Pfizer and BioNTech have applied to US regulatory authorities for emergency authorisation of a Covid-19 vaccine specifically tailored to target the most dominant strain of the Omicron coronavirus variant ahead of a nationwide booster programme planned for the autumn.

Equals. Morning Report- 23rd August 2022

Market Rates

Today’s Interbank Rates at 09:15 am against sterling movement.

GBP>EUR – 1.1848

GBP>USD – 1.1771

EUR>USD – 0.9928

GBP>CAD – 1.5311

GBP>AUD – 1.7075

GBP>SEK – 12.589

GBP>AED – 4.3205

GBP>HKD – 9.2340

GBP>ZAR – 20.005

GBP>CHF – 1.1359

  Today’s Calendar           

·       9:15 a.m.: France Aug. S&P Global PMIs

·       9:30 a.m.: Germany Aug. S&P Global/BME Manufacturing PMI

·       10:00 a.m.: Euro-area Aug. S&P Global PMIs

·       10:30 a.m.: UK Aug. S&P Global/CIPS PMIs

·       11:00 a.m.: UK to sell linkers

·       1:00 p.m.: ECB’s Panetta speaks

·       4:00 p.m.: Euro-area Aug. consumer confidence

·       4:00 p.m.: US new home sales

·       Germany’s Lindner holds talks with counterparts in Switzerland

·       Bloomberg’s credit market outlook Q&A With LGIM’s Lan Wu

   (https://frank-exchange.com/)

This document has been prepared solely for information and is not intended as an Inducement concerning the purchase or sale of any financial instrument. By its nature market analysis represents the personal view of the author and no warranty can be, or is, offered as to the accuracy of any such analysis, or that predictions provided in any such analysis will prove to be correct. Should you rely on any analysis, information or report provided as part of the Service it does so entirely at its own risk, and Frank eXchange Limited/Manor House Foreign eXchange Limited accepts no responsibility or liability for any loss or damage you may suffer as a result. Information and opinions have been obtained from sources believed to be reliable, but no representation is made as to their accuracy. No copy of this document can be taken without prior written permission.

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