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On August 5th, Kansas City Federal Reserve President Schmid stated, "The Fed needs a tighter monetary policy to restore inflation to its 2% target. The Feds current policy stance is not restrictive. Inflation is currently too high, which is worrying, and the Fed should not ignore it, even if it is caused by a supply shock. The recent easing of energy prices may be temporary. Investment in artificial intelligence is pushing up inflation, and the Fed should not ignore this."Federal Reserves Schmid: Im uneasy about the assumption that the inflation outbreak will be temporary. Our inflation problem isnt just about energy.Futures News, August 5th - According to foreign media reports, Malaysian palm oil futures on the Bursa Malaysia Derivatives Exchange (BMD) are likely to open lower on Wednesday morning, following the decline in external markets. Statements from Qatari and US officials boosted hopes for a diplomatic solution to the oil shipping issue in the Strait of Hormuz, causing oil prices to fall on Tuesday, closing at a three-week low. During Wednesdays electronic trading session, Brent crude futures fell further, coupled with a decline in Chicago soybean oil futures, which will drag down the early performance of Malaysian crude palm oil futures. An expected increase in Malaysian palm oil inventories is also unfavorable for prices. The Malaysian Palm Oil Board (MPOB) will release monthly data on August 10th. A survey shows that Malaysian palm oil exports in July will surge 14.8% month-on-month, production will increase by 7.4%, and inventories will rise to a five-month high. However, strong palm oil exports in July and the potential threat of a strong El Niño phenomenon to palm oil production in Southeast Asia will provide potential support for the palm oil market. Shipping surveyors estimate that Malaysian palm oil exports in July increased by 12.1% to 19.5% month-on-month.Federal Reserves Schmid: The recent easing of energy prices may be temporary.Federal Reserves Schmid: The job market appears to be broadly balanced.

GBP/USD seeks to regain 1.2300 as higher UK CPI strengthens the case for a rate hike by the Bank of England and the USD retreats

Alina Haynes

Mar 23, 2023 15:00

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During the Asian session, the GBP/USD pair attempts to reclaim the resistance level at 1.2300. Following a vertical correction, the Cable has recovered to near 1.2260 as the market anticipates that the absence of hawkish interest rate guidance from Federal Reserve (Fed) chair Jerome Powell while addressing the economy at the monetary policy meeting indicates that the Fed is close to ending its policy-tightening spell.

 

S&P500 futures have generated some gains in the Asian session following a decline on Wednesday as a result of Fed Powell's confirmation that the fight against intractable U.S. inflation will continue. Chairman of the Federal Reserve Jerome Powell has ruled out rate cuts in 2023, citing the difficulty of controlling inflation. In addition, US Treasury Secretary Janet Yellen's statement that the government "does not plan to insure all uninsured bank deposits" heightened fears of a banking sector collapse.

 

Following a recovery move, the US Dollar Index (DXY) has retreated on expectations that additional credit tightening to protect banking institutions will reduce overall demand, economic activity, and inflation. In the interim, the demand for US government bonds has increased as a result of expectations that US Janet Yellen will end further policy restrictions and reduce support for all bank deposits.

 

On the front of the United Kingdom, the Pound Sterling is likely to maintain its strength as the Bank of England (BoE) is scheduled to raise rates for the eleventh consecutive time. Governor Andrew Bailey of the Bank of England is expected to raise interest rates by 25 basis points (bp) in response to rising food and non-alcoholic beverage prices, as well as rising energy costs, which have contributed to inflation in the United Kingdom.

 

In the midst of global banking turmoil, the Bank of England's (BoE) interest rate decision will be difficult, as policymakers were divided over whether to raise rates further or maintain them at their present level.


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