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According to the Wall Street Journal: Meta Platforms (META.O) is in talks with media companies to reach AI content licensing agreements.Customs data showed that Switzerlands gold exports to the United States in August fell sharply by more than 99% from the previous month to 0.3 tons.1. Decision Background: Wednesdays data showed that UK inflation remained high at 3.8% in August, nearly double the Bank of Englands 2% target. Services inflation remained elevated, while inflation expectations rose. Economic growth slowed in the second quarter, with demand showing signs of weakness. 2. Interest Rate Level: The market generally expects the Bank of England to hold interest rates steady at 4% at this meeting. Key focus will be on guidance for further easing this year. 3. Vote Split: The market expects a 7-2 vote to keep interest rates unchanged (compared to a 5-4 split in August), with Taylor and Dhingra dissenting (Taylor voted for a 50 basis point cut in August); Deputy Governor Ramsden may also join the dissenting vote. 4. Forward Guidance: The Bank of England stated in August that "the restrictiveness of monetary policy has decreased," which the market interpreted as hawkish. This meeting will highlight whether this statement appears again or is removed or weakened. 5. Quantitative Tightening: Due to heightened bond market volatility (earlier this month, 20- and 30-year bond yields rose to their highest levels since 1998), the market expects the Bank of England to reduce its annual bond reduction from £100 billion to £60 billion to £75 billion. It is also likely to limit sales of long-term UK government bonds, favoring shorter-term bonds. 6. Market Expectations: Currently, the market generally expects the Bank of England to maintain interest rates unchanged this year, with a small chance of a 25 basis point cut. A sustained cycle of rate cuts will begin in 2026, with cumulative reductions of approximately 50 basis points.On September 18th, economists at ING Bank stated in a report that downside risks to the US job market were the primary rationale for the Federal Reserves decision to cut interest rates; this rationale is unsurprising given recent weak employment data. Federal Reserve Chairman Powell described the rate cut as a "risk-management-based rate cut" because, on the surface, the US economy appears to be in decent shape. However, economists noted that a deeper analysis reveals a shift in the situation, most notably in the job market. The economists also stated that the Feds upward revision of its growth and inflation forecasts, while simultaneously lowering its unemployment forecast, suggests that policymakers believe that swift and forceful action in the coming months will yield tangible results for the economy. They believe the Fed will ultimately cut interest rates by more than currently implied.Novo Nordisk (NVO.N) continued to rise in pre-market trading, currently up 4.7%, after the company released results of a study on semaglutide.

AUDJPY continues to struggle around 94.00 despite solid Aussie jobs data

Daniel Rogers

Nov 17, 2022 11:45

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The AUDJPY pair has stayed firm around 94.00 despite the release of bullish Australian employment data. Compared to the projected 15k and the preceding release of 0.9k, the Australian Bureau of Statistics announces that the economy has added 32,200 new jobs to the payroll market. In addition, the unemployment rate has decreased from 3.6% to 3.5% to 3.4%.

 

Australian employment numbers that surpass expectations will impress the Reserve Bank of Australia (RBA). This will allow RBA Governor Philip Lowe to continue steadily hiking rates. In light of this week's release of the RBA's minutes, the central bank will maintain a rate hike structure of 25 basis points (bps) because policymakers believe the Official Cash Rate (OCR) has already been hiked in a short amount of time.

 

Nevertheless, the inflation rate has not yet reached its high, as a historic increase in price growth observed in the third quarter indicates. The Australian inflation rate increased to 7.3%, exceeding the consensus expectation of 7.0%. This prompted the RBA to hike its projected interest rate to 8%. In addition to producing increasing price pressures, a limited market is responsible for the robust purchasing power of households.

 

As Russia-Poland tensions have largely calmed and no further developments are anticipated, the risk profile is expected to diminish.

 

On the Tokyo front, an unexpected decline in Gross Domestic Product is haunting investors. In contrast to expectations of a 0.3% increase, Japan's gross domestic product decreased 0.3% in the third quarter. We were surprised by the q/q decline in the third quarter because we underestimated the impact of higher inflation, the summer wave of COVID-19 infections, and a significant weakening of the yen, which exacerbated the nation's already soaring import costs.

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