Daily Market Update 12/04/2023

– IMF warns inflation will not decline this year

– All eyes on US inflation

– BoC to change their tune?


Market moves were pretty quiet over afternoon with most of the action on NOK pairs, which weakened across the board. GBPNZD hit new six-month highs, and the EUR caught some support after retails sales in February came in slightly better than expected, as did the Sentix investor confidence report in April.

The IMF remains concerned that inflation will not decline this year and that central banks will need to raise interest rates even further. Yields on 2-year US treasuries climbed above 4%, as markets continued to bet on a higher likelihood of a 0.25% hike in May by the Fed.

Today’s Overview

Two things to focus on today which could lead to broad expectations of more rate hikes to come from central banks globally. Firstly, the US core CPI numbers are expected to come in at 0.4% in March, with the year-on-year number to climb to 5.6%, which could well indicate inflationary pressures in the US are persisting. A higher inflation number and analysts expect the USD to gain going into the Fed meeting in May.

The BoC (Bank of Canada) is expected to hold rates at 4.5%. However, there is an expectation for the accompanying statement to change to a hawkish tone based on stronger domestic demand and persistent inflation risks. Now, the markets are expecting approximately 0.25% worth of rate cuts by year-end, so any hawkish message will likely alter these projections to the ‘hike-side’, which in turn could lead to strength in CAD. GBPCAD currently sits near 13-month highs, bounded by a clear line of resistance, signalling demand for CAD. A hawkish turn by the BoC could lead to markets considering other central banks turning hawkish also.

GBPCAD continues to sit near the March 2022 highs, capped by a clear level of resistance for further gains. The recent decision by OPEC+ to cut oil production saw oil prices rise, which in turn is another supporting argument for an increased demand for CAD. A hawkish turn by the BoC would give another reason for further demand for the currency, further cementing the level of resistance and seeing GBPCAD weaken towards the January/February support area.

Governor Bailey will be speaking today in Washington, and we will be listening out for any hints from the BoE to pause hiking rates in May.

Equals Market Analysis– 12th April 2023

Today’s Market Rates

Today’s Interbank Rates at 09:44 am against GBP movement.

GBP>EUR – 1.1369

GBP>USD – 1.2418

EUR>USD – 1.0921

GBP>CAD – 1.6722

GBP>AUD – 1.8651

GBP>SEK – 12.905

GBP>AED – 4.5588

GBP>HKD – 9.7470

GBP>ZAR – 22.870

GBP>CHF – 1.1210

Today’s Highlights

·        12:30 USD  Consumer Price Index ex Food & Energy (MoM)(Mar)     

·        12:30 USD  Consumer Price Index ex Food & Energy (YoY)(Mar)

·        13:00 GBP  BoE’s Governor Bailey speech                   

·        14:00 CAD  Bank of Canada Monetary Policy Report               

·        14:00 CAD  BoC Interest Rate Decision         

·        14:00 CAD  BoC Rate Statement

·        15:00 CAD  BoC Press Conference

·        18:00 USD  FOMC Minutes

·        19:15 GBP  BoE’s Governor Bailey speech


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