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On September 11, US President Donald Trump stated on Fox News Thursday night that he plans to block Democratic-backed legislation if Democrats regain control of the House and Senate after the midterm elections. This indicates that as Republicans struggle to retain their majority in Congress, Trump has begun to envision a governing strategy in a "divided government" scenario. Trump said, "Things will be different. Ill be a blocker, what else can I say? However, I might be able to make a deal with them (the Democrats). Theyll have demands, and you can make a deal with them. Thats often how it is." Trump also stated that this election is not as "difficult" as previous campaigns.Market news: After the Houthi rebels captured Moha in Yemen, Iranian Parliament Speaker Qalibaf praised the groups "victory".September 11th - US Treasury bonds suffered a sharp drop overnight due to escalating tensions in the Middle East pushing up oil prices, causing Australian government bonds to fall accordingly. The yield on Australian 3-year government bonds surged 18 basis points to 5.03%, while the yield on Australian 10-year government bonds jumped 13 basis points to 5.38%, both reaching new highs since May 2011.Trump stated that Iranians believe the U.S. Democrats might allow them to possess nuclear weapons.On September 11, U.S. Treasury Secretary Bessant took some unusual measures in recent weeks, seen as efforts to help lower yields, including expanding the bond buyback program and making rare interventions in the yens exchange rate. Bessant stated on Thursday that part of his actions were related to Irans actions. He said, "Im not doing this for the election." He pointed out that Iran is "trying to create economic problems for the United States through bond yields or oil prices." Bessant also attempted to clarify his "Im the house" comment. Two days earlier, when discussing Japan and the yen, he told traders, "Come and bet against me if you want." Regarding this statement, he explained, "When I said I am the house, I wasnt challenging people to compete with me." He said, "Im not saying Im always right, dont challenge me," "but what Im trying to express is that I have a more advantageous information, and Im trying to provide a reasonable analytical framework for the market to avoid panic."

The EUR/GBP exchange rate recovers above 0.8000 in advance of Eurozone inflation and UK gross domestic product

Alina Haynes

Mar 30, 2023 16:05

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The EUR/GBP pair extended its recovery above 0.88 during the Asian trading session. Anticipating that the European Central Bank (ECB) will continue to raise interest rates to combat persistent inflation, the cross has depreciated progressively. Friday will see the publication of preliminary Eurozone Harmonized Index of Consumer Prices (HICP) and Gross Domestic Product (GDP) (Q4) figures. Prior to the publication of these figures, it is anticipated that the asset will exhibit explosive activity.

 

It is anticipated that the preliminary Eurozone HICP will decelerate significantly from 8.5% to 7.3%. While it is anticipated that the core HICP will rise to 5.7% from 5.6% in the previous release. Weak energy prices are anticipated to have a significant impact on Eurozone inflation. In light of Christine Lagarde's prediction that inflation will remain elevated for an extended period of time, the European Central Bank (ECB) is expected to continue tightening monetary policy.

 

In the interim, banking tensions are subsiding as the absence of information regarding additional collateral damage has a positive impact on the market. Chief Economist Philip Lane stated on Wednesday that ECB interest rates must rise if banking tension has no or a "relatively limited" impact.

 

Investors avidly anticipate the United Kingdom's Gross Domestic Product (GDP) data. According to the consensus, the United Kingdom's growth in the fourth quarter of CY2022 remained unchanged. It is anticipated that the annual GDP will remain unchanged at 0.4%. It is expected that the British economy will undergo a severe recession as a result of high inflation and sluggish growth.

 

The Bank of England (BoE) policymakers appear confident that inflation will moderate in the near future and that the unexpected rise in February's inflation was a one-time anomaly; however, the absence of evidence raises doubts. If inflation persists, BoE Governor Andrew Bailey stated that additional rate increases would be announced. In contrast, Bank of America (BoA) analysts anticipate that the Bank of England (BoE) will not increase rates and will maintain current levels until 2024.


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