January 03, 2023

Daily Report 03/01/2023

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There were limited fundamentals developments during the holiday period with UK expectations in focus. CFTC data recorded a sharp decline in short Sterling positions to below 6,000 contracts from near 26,000 in the data released just before Christmas and the smallest short position since early March 2022. There was a renewed net increase to near 11,000 in the latest week, but with limited scope for further short covering. Nationwide reported a 0.1% decline in house prices for December with the year-on-year rate slowing to 2.8% from 4.4%, but above consensus forecasts of 2.3%.

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The final reading for the Euro-Zone PMI manufacturing index was unrevised at 47.8 for December with Euro-Zone economic developments having little impact. There was also further hawkish rhetoric from Bundesbank head Nagel which provided an element of Euro support.

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13.00 German Harmonized Index of Consumer Prices (YoY) (Dec) Exp. 10.7% Prev. 11.3%

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The US core PCE prices index increased 0.2% for November with the year-on-year rate declining to 4.7% from 5.0% which was in line with consensus forecasts. There was a small upward revision to the University of Michigan consumer confidence index to 59.7 for the final December reading from the flash reading of 59.1. The 1-year inflation expectations index declined to 4.4% from the flash reading of 4.6% with the 5-year index edging lower to 2.9% from 3.0%. Initial jobless claims increased to 225.000 in the latest week from 216,000 previously and in line with expectations while continuing claims increased to 1.71mn from 1.67mn. The US goods trade deficit narrowed sharply to $83.4bn from $98.8bn the previous month with a sharp decline in imports for the month.

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