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Iranian Foreign Ministry Spokesperson: We do not support the proposals made by US officials and their media regarding the Iranian nuclear issue.Federal Reserve Governor Waller: I am not worried about the dollar losing its reserve currency status and it still enjoys the trust of all parties.On April 18, Bank of Canada Governor John Macklem stated that he expects inflation to accelerate in March, but likely remain below 3%. He also noted that officials will closely monitor medium- to long-term inflation expectations when deciding whether to raise interest rates. Macklem said, “The central bank doesn’t want to act too early, raise rates, and drag down growth, especially when growth is already weak. On the other hand, you don’t want to act too late and let inflation take hold and become entrenched.” Statistics Canada is scheduled to release March inflation data next Monday. A few hours later, the Bank of Canada will release its quarterly survey, measuring business and household sentiment, which will provide the first clue to inflation expectations. Macklem said he is not too worried about higher short-term inflation expectations, which will be sensitive to the sharp rise in energy prices stemming from the conflict with Iran. “That’s what would really worry us if businesses and households weren’t confident that inflation would return to 2% in the medium term,” Macklem said. Bank of Canada officials expect the energy price increases to not quickly transmit and push up the prices of other goods and services. Unlike the early part of this decade when inflation reached a 40-year high after the COVID-19 pandemic, overall inflation was below 2% before the Iran war. In addition, core price increases have slowed, and the countrys economy has spare capacity, which should limit price increases.Federal Reserve Governor Waller: Scenario analysis is crucial for central bank officials.April 18th - According to a source familiar with the matter, Cursor, a leading startup in the field of artificial intelligence programming, is in advanced talks with investors to raise approximately $2 billion in a new funding round, which would value the company at over $50 billion (excluding this round of investments). The source stated that existing investor Andreessen Horowitz will co-lead this round. Two other sources indicated that Nvidia also plans to participate in the funding round. One source stated that Thrive Capital is also in talks to participate.

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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