April 17, 2023

Daily Report 17/04/2023

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According to the latest ONS data UK online job ads in the latest week declined 18% from the previous year. Bank of England Monetary Policy Committee member Tenreyro maintained a dovish policy stance with comments that patience was needed to bring inflation down and emphasised the risk of pushing rates too quickly given policy lags involved. The impact was limited given that he has persistently called for a more dovish stance. Global developments dominated on Friday with the dollar recovering ground while risk appetite dipped with equities losing some ground Latest CFTC data recorded a further decline in short, non-commercial Sterling positions to below 2,500 contracts in the latest week from close to 15,000 the previous week and the smallest short position for over 13 months, limiting the scope for any further position adjustment.

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The Euro was unable to make headway ahead of Friday’s New York open with underlying pressure for a correction. The Euro dipped at the European close and was unable to regain higher levels with pre-weekend position adjustment also a key element. There was little net change on Monday with the Euro holding as the dollar maintained a firm underlying tone but was unable to extend gains.

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18.00 Christine Lagarde Speech

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US retail sales declined 1.0% for March compared with expectations of a 0.4% decline while there was a slight upward revision for the February data to a decline of 0.2%. Underlying sales declined 0.8% after being unchanged the previous month while the control group declined 0.3%. The University of Michigan consumer confidence index improved to 63.5 for April from 62.0 previously and slightly above consensus forecasts with net increases in the current situation and expectations components. The principal focus was on the inflation expectations data. The 1-year inflation expectations index jumped to 4.6% from 3.6% the previous month despite a decline in headline inflation data while the 5-year index held at 2.9%. The jump in shorter-term inflation expectations may be an aberration, but the Federal Reserve remains sensitive to the data, especially as it is determined to keep expectations anchored in order to help prevent an inflation spiral. Markets shifted their pricing slightly to expecting over an 80% chance that the Fed would hike rates at the May policy meeting.

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