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On August 2, Russias First Deputy Permanent Representative to the United Nations, Konstantin Polyansky, stated at a Security Council meeting that UN staff were unwilling to take seriously the Ukrainian militarys attack on Russian civilian facilities, which undermined the UNs authority. He said: "In this case, the relevant staff of the UN Secretariat acted with extreme hypocrisy, feigning ignorance and evading responsibility by claiming they could not verify the authenticity of the information about Ukrainian crimes. All of this clearly undermined the authority of our global organization."On August 2nd, a full year since the Bank of England began its interest rate-cutting cycle, despite four consecutive rate cuts and the likelihood of further cuts, British households continue to face the highest borrowing costs in a generation. Analysis of Bank of England savings and mortgage data shows that Britons are spending £11 billion (US$14.5 billion) less annually than in July of last year. This loss stems primarily from two factors: First, the rate cuts have hit savers hard, significantly reducing the returns on their savings. Second, many homeowners have yet to benefit from the rate cuts, as they are still waiting for mortgages locked in during periods of high interest rates to expire. Edward Allenby, an economist at Oxford Economics, said: "Against the backdrop of slowing real wage growth and tighter fiscal policy, the lagged impact of past rate hikes on mortgage holders will continue to dampen consumption. The Bank of Englands rate-cutting cycle is unlikely to provide a significant boost to business investment and consumer spending over the next few years."DeepBlue Auto: Global deliveries of 27,169 vehicles in July, a year-on-year increase of 62%.On August 2, CNN reported that the United States plans to conduct the first large-scale test of its Golden Dome missile defense system before the 2028 presidential election, allowing the current administration to promote it as a political achievement during the campaign. The report indicated that the test is tentatively scheduled for the fourth quarter of 2028. An unnamed US Department of Defense official stated that this timeline indicates that Republicans want to have a demonstration to show during the November election. He also noted that completing the systems test preparations within such a tight timeframe is an "extremely challenging task," especially given the high technical complexity of deploying a new missile interceptor system. This test may only be the first phase of the Golden Dome project, and full deployment will take much longer.YouGov poll: Most Americans believe tariffs hurt American consumers; only 22% blame foreign manufacturers.

EUR/USD Accurately Reflects Pre-Fed Anxiety Below 1.0800, Per Lagarde Of The ECB

Daniel Rogers

Mar 22, 2023 14:52

EUR:USD.png 

 

Following a four-day uptrend, EUR/USD fluctuates between 1.0760 and 1.0770 on the day of the Federal Reserve (Fed) decision as supporters halt at the highest levels in five weeks. The Euro-U.S. dollar exchange rate reflects the market's caution ahead of key catalysts, as well as traders' indecision in the aftermath of the recent upswing in sentiment and Treasury bond yields, as well as hawkish central bank bias.

 

Following several days of risk aversion, global markets exhaled a murmur of relief on Tuesday as the market accepted US policymakers' efforts to contain the banking crisis.

 

As one of the most significant developments, Treasury Secretary Janet Yellen's statement that "Treasury, Fed, and FDIC actions reduced the risk of additional bank failures that would have imposed losses on the deposit insurance fund" garnered significant attention.  Bloomberg reported earlier on Tuesday that "US officials are examining ways to temporarily expand Federal Deposit Insurance Corporation (FDIC) coverage to all deposits, a move sought by a coalition of banks arguing it is necessary to prevent a potential financial crisis."

 

Not only US policymakers, but also ECB policymaker Martins Kazaks and Switzerland's Banking Association Chairman, Dr. Marcel Rohner, attempted to convince the markets that their respective banking systems are not imminently in danger of collapsing.

 

Recently, the news that US policymakers are considering methods to circumvent the US Congress in order to protect the banks coincided with speculations that the First Republic Bank is seeking government assistance in order to encourage EUR/USD traders to purchase the currency pair.

 

Contradictory data from Europe and the United States challenges pair traders at the beginning of the most important trading day.

 

Tuesday, Germany's ZEW Economic Sentiment Index decreased to 13.0 for March from 28.1 in February, compared to the market's expectation of 16.4, while the Current Situation index came in at -46.5 for the month, versus -45.1 previously and -45.8 analysts' expectations. Notable is the fact that the ZEW Economic Sentiment Index for the Eurozone dropped to 10.0 in March from 29.7 in the previous reading and market expectations of 23.2.

 

In contrast, US Existing Home Sales increased by 14.5% in February, compared to the 0.0% expected and the -0.7% recorded previously. However, the Philadelphia Fed Non-Manufacturing Business Outlook survey index dropped to -12.8 in March, dampening subsequent US Dollar-related optimism.

 

S&P 500 Futures remain lackluster despite Wall Street's optimistic close, and benchmark US Treasury bond yields struggle to extend a two-day rebound from the lowest levels since September 2022. The yields on 10-year and 2-year US Treasury bonds fluctuate around 3.60 percent and 4.18 percent, respectively, as of press time.

 

Ahead of the crucial Federal Open Market Committee (FOMC) monetary policy meeting, Christine Lagarde's comments could provide EUR/USD traders with amusement.

 

Noting that a 0.25 basis point rate hike is almost certain, EUR/USD skeptics should keep an eye out for hawkish developments in the dot plot and remarks to defer banking turmoil in Fed Chair Jerome Powell's speech.


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