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On September 17th, Dongfeng Group and Xiangyang State-owned Assets announced a joint venture to establish a new company focused on the research, development, manufacturing, and sales of intelligent off-road vehicles. According to sources familiar with the matter, the intangible assets contributed by Dongfeng Group include the license to use the vehicle platform and intelligent driving proprietary technology asset portfolio, as well as the trademark rights for the Mengshi series. This means that new vehicles produced by the new company will share the Mengshi trademark and will be used to launch more intelligent off-road vehicles.On September 17th, news broke that Shanzi Hi-Tech was moving forward with a restructuring with Nezha Autos parent company, Hozon New Energy Automobile Co., Ltd. Former Hozon New Energy personnel will complete the handover and be cleared out after October 1st, with the Shanzi Hi-Tech team officially taking over. Hozon New Energys administrators have explicitly denied the rumors. "Shanzi Hi-Tech is not restructuring Nezha Auto," the administrators added. "At least, we havent received any material indicating Shanzi Hi-Techs substantive intention to participate."The Governor of the Bank of Canada will hold a press conference in ten minutes; the U.S. EIA crude oil inventory for the week ending September 12 will be released in ten minutes.Morgan Stanley (MS.N) is combining two investment banking teams.On September 17th, Investec Economics analyst Sandra Horsfield stated in a report that the UKs headline inflation rate remained unchanged at a high 3.8% in August, increasing the likelihood that the Bank of England will keep interest rates unchanged for the remainder of 2025. Currently, UK inflation remains well above the Bank of Englands 2% target. Horsfield stated, "Only evidence of declining inflation will convince the majority of the Monetary Policy Committee that further rate cuts are appropriate." Data from the London Stock Exchange Group indicates that the market believes there is a 40% probability of another Bank of England rate cut before the end of 2025.

The 1.1250 level provides resistance for the GBP/USD as hawkish Fed bets rise

Daniel Rogers

Oct 17, 2022 14:49

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The risk-on attitude has started to wane in the Tokyo session, which has reinforced the GBP/USD pair's bids. The start of the US quarterly results season sparked a rise in the S&P500 on Monday after a down Friday, but it has since faded.

 

The US dollar index (DXY) has attempted a recovery after dropping below the critical support level of 113.00. While US 10-year Treasury yields have been doing poorly. Strong bets on the Federal Reserve (Fed) raising interest rates by 75 basis points (bps) have helped to maintain the current downward tendency in rates. The likelihood of a 75 bps rate hike has increased to 99.4%, according to CME FedWatch.

 

Political unrest in the UK, where Prime Minister Liz Truss last week ousted Chancellor Kwasi Kwarteng, has also contributed to volatility in the sterling area. UK Finance Minister Kwarteng's resignation from his position appears to be the result of preparations for the reversal of the anticipated hike in corporate taxes to 25% starting in 2023.

 

Earlier, a sell-off on the UK bond market was sparked by the decision to freeze corporate tax rates at 19%. Significant bids were made on the UK stock exchanges, and the yields on government bonds shot through the roof. This forced the Bank of England (BOE) to step in and announce a plan to buy bonds in order to shield pension funds that were exposed to gilts.

 

Goldman Sachs predicts a dismal economic outlook for the UK, thus the pound bulls may experience volatility. The bank stated, "We have reduced our UK growth projection and now predict a more severe recession, taking into consideration weaker growth momentum, significantly tighter financial conditions, and the hike in corporate tax beginning in April of next year." Additionally, the bank downgrades its earlier forecast of a 0.4% fall in the UK's Gross Domestic Product (GDP) for 2023 to one of 1%.


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