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According to RIA Novosti, Russian President Vladimir Putin stated that seeking a solution to the Ukraine crisis is a daunting task.On December 4th, ING interest rate strategists Padhraic Garvey and Benjamin Schroeder stated in a report that the US 10-year Treasury yield is likely to "maintain" its trading range of 4% to 4.10% for some time before breaking through. They stated, "We believe a drop below 4% would be temporary, while a break above 4.1% is more structural and will certainly be a theme in 2026." The strategists indicated that the market lacks a compelling reason to fall below 4%, but is also unwilling to push further above 4.1%.December 4th Futures News: 1. WTI crude oil futures trading volume was 661,190 lots, an increase of 28,819 lots from the previous trading day. Open interest was 1,921,825 lots, an increase of 7,158 lots from the previous trading day. 2. Brent crude oil futures trading volume was 120,219 lots, a decrease of 871 lots from the previous trading day. Open interest was 222,988 lots, an increase of 288 lots from the previous trading day. 3. Natural gas futures trading volume was 668,655 lots, an increase of 91,124 lots from the previous trading day. Open interest was 1,548,511 lots, an increase of 24,205 lots from the previous trading day.December 4th - For many emerging market currencies in Asia, the widely anticipated December rate cut by the Federal Reserve may be timely. The Feds easing of monetary policy will help alleviate downward pressure on the Indian rupee and provide a breather for weaker currencies such as Indonesia, South Korea, and the Philippines. This week, the rupee fell below 90 against the dollar for the first time, while the South Korean won has fallen by more than 4% this quarter. Wee Khoon Chong, Asia Pacific market strategist at BNY Mellon, said, "Further easing by the Fed is likely to support Asian currencies overall." He stated that regional currencies with strong growth momentum and sound fiscal policies, such as the South Korean won, are likely to perform best. On the other hand, he noted that the Indian rupee still faces negative factors including high US tariffs and downside risks to growth, while the Philippine peso will be dragged down by the central banks easing bias. TS Lombard strategists Daniel von Ahlen and Andrea Cicione wrote, "Now is the time to go long on Asian currencies."Korean chip stocks were led by Hanmi Semiconductor, with its share price falling 4.4% to 116,100 won.

GBP/USD falls to around 1.2370 as the BoE considers taking swift action ahead of UK inflation and US purchasing managers' indices

Alina Haynes

Apr 17, 2023 13:53

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On Monday morning, the GBP/USD currency pair retested an intraday low of 1.2390 after extending Sunday's decline from a 10-month high. To provoke adverse after breaking a four-week uptrend, the Cable pair explains the most recent concerns emanating from the United Kingdom (UK) and the optimism surrounding the Federal Reserve (Fed).

 

According to the Financial Times (FT), "The Bank of England is considering a major overhaul of its deposit guarantee scheme, including increasing the amount covered for businesses and compelling banks to pre-fund the system to a greater extent to ensure faster access to cash when a lender collapses."  The revelation fuels banking concerns in the United Kingdom and places pressure on the Cable duo.

 

UK Chancellor Jeremy Hunt's concerns about US subsidies may also be exerting downward pressure on the GBP/USD exchange rate as British firms rush to claim benefits before leaving the country. According to the news, "Chancellor Jeremy Hunt warned Sky News that Britain should be wary of any new subsidies, warning that they could undermine the economy and possibly even spark a protectionist trade war."

 

A larger-than-expected decline in US retail sales was unable to offset positive data from US industrial production and the University of Michigan's (UoM) consumer confidence index from the previous day. Despite this, US retail sales decreased by 1.0% in March compared to the predicted -0.4% decline and February's -0.2% decline. As opposed to the 0.2% market consensus and previous reading, Industrial Production increased by 0.4% in the month in question. The preliminary result of the University of Michigan's (UoM) Consumer Confidence Index for April, which increased to 63.5 from 62.0 analysts' expectations and previous readings, was also encouraging. In addition, inflation forecasts for the next year increased from 3.6% in March to 4.6% in April, while inflation forecasts for the next five years decreased by 2.9% during the same month.

 

Notably, Fed officials have recently appeared more hawkish than their BoE counterparts, which has exerted additional pressure on the GBP/USD exchange rate.

 

In this environment, the S&P 500 Futures exhibit modest gains following Wall Street's pessimistic close, while bond yields remain unchanged following weekly increases.

 

Moving forward, the current week is crucial for GBP/USD speculators as it contains a variety of high-quality inflation, employment, and UK PMI data. These data may be used to support the Bank of England's (BoE) officials' waning hawkish inclination and may keep bears in play. However, the US PMIs and Fed discussions should not be disregarded when looking for clear guidelines.

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