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June 12th - The UKs GDP fell 0.1% month-on-month in April, impacted by the economic downturn caused by the war with Iran. Data released by the Office for National Statistics on Friday was in line with economists expectations of a decline. The weak April performance was partly due to the fading of factors that drove exceptionally strong growth in March, when consumers stockpiled petrol and manufacturers moved up production in anticipation of higher energy prices from the Iran war. Looking at the less volatile three-month rolling data, the UK economy grew 0.7% in the three months to April compared to the previous three months, in line with analysts expectations. Since the outbreak of the Middle East conflict in late February, damage to energy infrastructure and the blockade of the Strait of Hormuz have driven oil prices sharply higher. The weak April performance is another blow to Prime Minister Starmer, who is facing a leadership challenge if Andy Burnham wins next weeks Mekfield by-election.The UKs seasonally adjusted trade balance with the EU in April was -£12.998 billion, compared with -£12.023 billion in the previous month.The UKs seasonally adjusted trade balance for April was -£8.435 billion, compared to a forecast of -£5.744 billion and a previous reading of -£9.658 billion.The UKs GDP grew 0.7% month-on-month in the three months of April, the largest increase since May 2024.The UKs seasonally adjusted non-EU trade balance for April was -£13.048 billion, revised from -£15.195 billion in the previous month.

As the BoJ ponders a YCC expansion, EUR/JPY continues to decline, falling below 142.60

Alina Haynes

Apr 06, 2023 11:52

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After plunging below 142.60 during the Asian trading session, the EUR/JPY pair's three-day losing trend was extended. Renewed rumors of an expansion of the Bank of Japan's (BoJ) Yield Curve Control (YCC) are exerting immense pressure on the cross.

 

The Japanese economy is experiencing gradual wage growth, and inflation is expected to respond to recent increases in crude oil prices. Analysts at Wells Fargo believe the BoJ will take advantage of a tactical opportunity to further modify its policy settings in the fourth quarter of 2022, and are inclined toward a meeting in October. They added that this timeframe is optimal for a smooth policy adjustment, as monetary easing from the Federal Reserve (Fed) and other major central banks should alleviate yield pressure.

 

In particular, the Bank of Japan (BoJ) will raise the target yield for 10-year Japanese government bonds (JGBs) from 0% to 0.25% and increase the tolerance interval surrounding this target to +/- 75 basis points.

 

Accelerating PMIs in the Eurozone provide support for the European Central Bank's sustained rate hikes. (ECB). S&P Global reported a Composite PMI of 53.7 on Wednesday, which was higher than the previous release of 52.0 but below expectations of 54.1, the highest level in the past ten months.

 

According to Reuters, S&P Global issued the following statement: "Manufacturing production increased slightly, but the service sector had the greatest impact on March's accelerated growth."

 

Wednesday, ECB policymaker Boris Vuji stated regarding interest rate forecasts, "The majority of the rate-hiking cycle has passed." He added, "We may require additional rate increases to address core inflation."

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