Daily Market Update 10/02/2023

Yesterday’s Overview

Markets continued to sell USD yesterday on the back of the less hawkish comments from Fed Powell on Tuesday. Trading at the moment seems to be one of markets positioning themselves ahead of next week’s inflation numbers. Should we see inflation come in higher, then we would expect the USD to gain off this.

Ahead of those numbers next week as well, reports are suggesting that traders are starting to wage that we could see rate hikes all the way to 6% at its peak this year. Current OIS projections put peak rates at 5.15%, and this thought is also very contrary to thoughts just last week that we would see rate cuts before year-end. As it’s been well documented over the last 12 months, an aggressive rate hike cycle has been supportive of the USD.

Today’s Overview

UK GDP data this morning revealed the UK narrowly avoided a recession in the last quarter of 2022, with the QoQ figure and YoY both coming in as expected. However, the monthly GDP print for December did come in lower at -0.5% vs -0.3% expected, which can largely be attributed to strike action. The base case for the UK still remains that we will see a recession this year. GBP is down across G10 currencies as a result.

We have BoE Pill speaking again today, as well a few members from the ECB, and then focus will be on the University of Michigan’s sentiment and inflation expectations in the afternoon. A higher print on the inflation expectations will likely cause the market to think that next week’s inflation numbers could be higher, and thus be supportive of USD.

CAD will be in focus this afternoon as well with data from the job sector. The most recent BoC meeting suggested that the Bank is near the end of its rate hiking cycle, with cuts priced in by year-end. A strong set of job numbers and we could see these rate cutting expectations eased off, and the sentiment for further hikes by the BoC increase.

Equals Money Market Analysis– 10th February 2023

Today’s Market Rates

Today’s Interbank Rates at 09:50am against sterling movement.

GBP>EUR – 1.1298

GBP>USD – 1.2105

EUR>USD – 1.0715

GBP>CAD – 1.6257

GBP>AUD – 1.7446

GBP>SEK – 12.574

GBP>AED – 4.4454

GBP>HKD – 9.5010

GBP>ZAR – 21.521

GBP>CHF – 1.1170

Today’s Highlights

·        CAD      Net Change in Employment(Jan)

·        CAD      Unemployment Rate(Jan)

·        USD      Michigan Consumer Sentiment Index(Feb)


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