Key Points:
• USD starts weaker following Fedspeak
• ECB Lagarde still on the rate hike charge
• UK inflation major data print for UK this week
Recap:
Markets very quiet and timid through most of Friday’s trading session, until late in the day during Fed Chair Powell’s speech at the Thomas Laubach Research Conference. The key line which saw GBPUSD and EURUSD jump off weekly lows was that ‘policy rates may not have to rise as far as otherwise due to tightening bank credit conditions’. Overall, USD still managed to finish the week higher ahead of key data over this week.
Comments from Janet Yellen on Friday may have also dampened Fed interest rate prospects after she told heads of the large banks that more mergers may be necessary.
Over the weekend ECB president Christine Lagarde doubled down on her hawkish rhetoric by suggesting that the ECB isn’t pausing based on the information they have today. The EUR has started the week stronger.
Markets
The UK will be back in focus this week with the release of April’s inflation numbers. Current expectations see CPI to drop to 8.2% from 10.1%, and core CPI dropping to 6.1%. Should we see a number lower than this, then we will likely see scaling back of rate expectations by the BoE, which in turn will put GBP under pressure. Anything higher than what’s expected and expect GBP to continue to push on higher.
May’s PMI numbers will be out on Tuesday for the UK, US, and EU to give a gauge of the strength of each economy, and we have German and US GDP numbers for the first quarter on Thursday. Minutes from the latest Fed meeting will be released Wednesday evening and the week ends with the Feds preferred measure of inflation, core PCE.
Little data out today aside from the Eurozone consumer confidence, and debt ceiling talks are set to continue with Janet Yellen suggesting that the government will fall short of funds by mid-June. USD has started the week weaker after Fed member Kashkari suggested that he may support holding interest rates in June.
Equals Market Analysis– 22nd May 2023
Today’s Market Rates
Today’s Interbank Rates at 09:32 am against GBP movement.
GBP>EUR – 1.1506
GBP>USD – 1.2427
EUR>USD – 1.0802
GBP>CAD – 1.6777
GBP>AUD – 1.8731
GBP>SEK – 13.081
GBP>AED – 4.5628
GBP>HKD – 9.7190
GBP>ZAR – 23.970
GBP>CHF – 1.1154
Today’s Speeches
• EUR – ECB Vujcic, Guindos, Holzmann, Villeroy. and Lane
• USD – Bostic, Barkin, and Daly
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