January 24, 2023
Daily Report 24/01/2023
Sterling was unable to make further headway after Monday’s European open and dipped to lows against the dollar and the US currency attempted to regain ground. There were also further reservations over near-term UK economic trends. There were renewed gains for equities after the Wall Street open which helped trigger another round of Sterling buying. The latest UK PMI data will be watched closely on Tuesday with expectations that the manufacturing and services-sectors will remain in contraction. Any move back into expansion would trigger a net improvement in sentiment while a sharper decline would trigger fresh reservations over the near-term outlook. Risk appetite held firm on Tuesday which helped underpin confidence as Wall Street indices posted 6-week highs. In this context, the global PMI data releases will also important for UK currency moves.
9.30 S&P Global/CIPS Service PMI (Jan) Exp. 49.9 Prev. 49.9
The Euro was unable to make further headway after Monday’s European open and drifted lower with a correction from nine-month highs seen in Asia. In its latest monthly report, the German Bundesbank stated that the economy likely stagnated in the fourth quarter of 2022, but this was a better performance than expected previously. The German central bank also stated that recent indicators have been better than expected while stresses in the energy market are easing and supply-chain bottlenecks are slowly dissipating which maintained an element of confidence in the outlook. ECB council member Kazimir stated that the central bank should deliver two more interest rate increases of 50 basis points despite an easing in inflation pressures. Kazimir also stated that it was essential to focus on underlying inflation. Fellow Council member Visco stated that Italy can deal with the impact of a gradual tightening. Euro-Zone consumer confidence improved to -20.9 for January from -22.0 previously, but this was slightly worse than expected as consumers remained in a cautious mood. Overall confidence in the Euro-Zone outlook was still underpinned by lower gas prices.
9.00 S&P Global Composite PMI (Jan) Exp. 49.8 Prev. 49.3
9.45 Christine Lagarde Speech
The dollar was able to make limited headway into Monday’s New York open, although gains remained limited with selling interest against the yen. US Treasuries lost ground after the New York open and the dollar posted strong gains to highs before a partial correction as Treasuries found fresh support.
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