November 23, 2022

Daily Report 23/11/2022

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Domestic developments continued to have little impact on Tuesday with little sustained reaction to the latest UK borrowing data which showed a mixed picture. Overall risk appetite was firmer which provided a solid base for the currency and it was able to make net gains on the day. The latest PMI business confidence data released on Wednesday will be important for sentiment surrounding the economy with any dip further into contraction territory increasing concerns over the threat of a deeper downturn. Consensus forecasts are for both sectors to remain below the 50 threshold. Comments from the Bank of England will be watched closely and the decision whether another Scottish independence referendum can be held without Westminster approval will also be significant.

Key Data

9.30 S&P Global/CIPS Services PMI (Nov) Exp. 48 Prev. 48.8

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The Euro-Zone current account remained in deficit for September with a shortfall of €8.1bn after a €27.1bn deficit the previous month. In the 12 month to September, there was a deficit of €50bn and 0.4% of GDP compared with a surplus of €336bn and 2.8% of GDP the previous year. ECB council member Rehn stated that the pace of rate hikes and the December call will depend on how the economy develops. Fellow member Simkus stated that 50 or 75 basis-point hikes were possible for the December policy decision as the internal debate continued. Bundesbank head Nagel hinted that he would back a 50 basis-point rate hike at the December meeting, but he did not want to get drawn into a debate and also commented that rates were still very low and there was still a lot of work to do in raising rates given that inflation picture was likely to remain strong in 2023.

Key Data

8.30 German S&P Global/BME Composite PMI (Nov) Exp. 44.9 Prev. 45.1
8.30 German S&P Global/BME Manufacturing PMI (Nov) Exp. 45 Prev. 45.1

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The US Richmond Fed manufacturing index improved marginally to -9 for November from -10 the previous month and in line with consensus forecasts. Shipments declined on the month while there were further sharp declines in new and unfilled orders. Employment edged lower on the month while the rate of wage increases slowed. Although there was a slowdown in the pace of prices paid, prices received increased at a faster rate which will cause some inflation concerns.

Key Data

13.30 Durable Goods Orders (Oct) Exp. 0.4% Prev. 0.4%
13.30 Nondefence Capital Goods Orders ex Aircraft (Oct) Exp. 0.4% Prev. -0.4%
19.00 FOMC Mninutes