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According to Punchbowl: The U.S. House of Representatives passed a package of aid to Ukraine and sanctions against Russia.Japanese Finance Minister Satsuki Katayama: The Middle East conflict and oil price fluctuations are also reasons for the weakening of the yen.June 5th - Japanese workers real wages have risen for the fourth consecutive month, marking the longest winning streak in four years and further strengthening the Bank of Japans case for an interest rate hike this month. The Ministry of Health, Labour and Welfare reported on Friday that inflation-adjusted real wages rose 1.9% year-on-year, a faster pace than the revised 1.4% in the previous month. This figure exceeded economists previous expectations of a 1.7% increase. Nominal wages rose 3.5%, also better than the market consensus of 3.1%. Basic wages rose 3.4%; while another wage indicator closely monitored by Bank of Japan officials and effectively mitigating sampling errors showed that full-time workers wages rose 2.6%. Both figures indicate that the underlying momentum of wage growth in Japan remains robust.On June 5th, Futures News reported that, according to foreign media, Chicago Board of Trade (CBOT) corn futures closed modestly lower on Thursday, with the benchmark contract down 1.8%, hitting its lowest level since late January. This was mainly due to favorable weather conditions in the Midwest, a decline in international crude oil futures, and weak corn export sales. Traders said the July contract fell to its lowest level in nearly five months, while the December contract fell to its lowest level in four and a half months. In recent weeks, the grain market has become less sensitive to energy price fluctuations as weather conditions have become the focus of market attention. The Buenos Aires Grain Exchange reported that Argentinas corn harvest is 40.6% complete, up 6% from a week ago. The corn production forecast remains unchanged at 64 million tons.On June 5th, according to foreign media reports, international oil prices fell 3% on Thursday, with market focus shifting from supply disruption risks to the possibility of easing tensions in the Middle East. Following the ceasefire agreement announced by Israel and Lebanon, investors began betting that the US and Iran might further advance peace talks, ultimately leading to the restoration of normal navigation in the Strait of Hormuz, thereby alleviating global energy supply tensions. Market participants believe that the conditional ceasefire agreement reached between the Israeli and Lebanese governments on Wednesday is an important signal for promoting US-Iran peace talks. Iran had previously stated that any agreement with the US would be contingent on Israel ceasing its military operations against Hezbollah in Lebanon. With the agreement between Israel and Lebanon, market expectations for the reopening of the Strait of Hormuz have rapidly increased. Although shipping through the strait remains nearly stalled, some vessels have begun redeploying towards the Persian Gulf, seen as a sign of market expectations for improved conditions. Despite the short-term oil price correction, some institutions remain cautiously optimistic. UBS believes that as long as shipping through the Strait of Hormuz remains restricted, the global oil supply shortage will be difficult to completely alleviate, and the upside risk for oil prices remains.

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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