March 03, 2023

Daily Report 03/03/2023

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The ONS reported that job adverts declined in late February with the overall total declining 23% from the previous year. The latest Bank of England survey reported that businesses are planning to increase prices 5.4% over the next 12 months from 5.8% previously and the lowest reading since February 2022. Planned wage increase remained unchanged at 5.7% and equalling 6-month lows. The data indicated that labour-market pressures could be starting to ease slightly. According to Bank of England chief economist Pill, the evidence suggests that the economy has been slightly stronger than forecasted and the pace of wage settlements was also slightly stronger than expected, but he also commented that some high-frequency indicators of wages had fallen quite sharply recently.

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ECB President Lagarde stated that the bank will have to pursue higher rates and that the peak is not known yet which failed to provide further Euro support on Thursday. Euro-Zone consumer prices increased 0.8% for February with the headline inflation rate declining to 8.5% from 8.6%, but this was significantly above consensus forecasts of 8.2%. The underlying inflation rate increased to a record high of 5.6% from 5.3% and above market expectations of 5.3%. The stronger than expected inflation rate reinforced expectations that the ECB would have to maintain a hawkish stance and engage in further significant interest rate hikes with a potential terminal rate of 4.00%. ECB minutes from January make a reference to the council needing to be careful with communication as rates increased.

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US initial jobless claims declined slightly to 190,000 in the latest week from 192,000 previously and slightly below consensus forecasts of 195,000 while continuing claims were unchanged at 1.66mn in the latest week which suggested that the labour market remained robust. The dollar gained further support after the US open with the Euro dipping and struggling to regain any territory as the dollar held a firm tone.

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