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July 24th - Marcel Thieliant, Head of Asia Pacific at Capital Economics, stated that the Bank of Japan (BOJ) may be more pessimistic about Japanese economic activity and is likely to keep interest rates unchanged at its meeting next week. Thieliant noted that although the BOJ believed in June that downside risks to economic activity had diminished, "we believe that the subsequent resurgence of oil prices has dampened the central banks optimism." Thieliant added that the BOJ will "certainly maintain its view that inflation risks are skewed to the upside." Capital Economics expects the BOJ to raise its policy rate to 1.25% in October.July 24th - SK Hynix and Samsung Electronics are about to face scrutiny from investors regarding memory chip demand. Currently, the South Korean stock market has become a key indicator of global AI market sentiment, but it is experiencing significant volatility driven by leveraged chip trading. Japanese competitor Kioxia will also release updates, addressing the issue of its market capitalization halved in just a few weeks, highlighting the continued risk of market volatility amid growing concerns that the AI-driven rally has gone too far. HSBC analysts point out that rising high-bandwidth memory (HBM) prices and the launch of the more expensive HBM4 chip, crucial for AI development, should support the performance of Samsung and SK Hynix, thus alleviating investor concerns about a slowdown in profits in the second half of the year.Hong Kong-listed AI stocks saw some gains, with Zhipu (02513.HK) rising over 10%.The yield on Japans two-year government bonds rose 1.5 basis points to 1.505%, hitting a new high since May 1995.On July 24th, the highest 7-day annualized yield of Tencent Wealth Managements "Current Account +" was 1.4950%, and the lowest was 0.7420%. The highest 7-day annualized yield of WeChat Pays "Lingqian Tong" was 1.0130%, and the lowest was 0.9240%. The highest 7-day annualized yield of Alipays "Yuebao" was 1.0620%, and the lowest was 0.9640%.

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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