March 31, 2023

Daily Report 31/03/2023

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There were no significant UK data releases on Thursday with global conditions tending to dominate. Overall risk appetite held firm which provided a solid backdrop for the UK currency and the FTSE 100 index secured a further net advance on the day. The currency was also underpinned by expectations of gains during April on seasonal grounds with traders looking to front-run expected gains

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The Euro briefly lost ground after Thursday’s European open, but there was still solid underlying buying on dips and it quickly edged higher again. Industrial and consumer sentiment both edged lower for March and the overall business and consumer confidence index declined slightly to 99.3 from 99.8 and slightly below expectations. The data continued to suggest fragile confidence despite lower energy prices. The German consumer prices inflation rate declined sharply to 7.4% for March from 8.7% previously which was primarily due to favourable base effects after the jump in prices last year and the figure was slightly above consensus forecasts of 7.3% for the month.

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Some Federal Reserve officials hit the wires on Thursday. The tone of the messages is that interest rates could rise further if inflation persists, and rate cuts for later in the year are off the table for the moment. Markets still see some possibilities for rate cuts, assuming a hard landing of the economy ahead, but as the banking crisis eases, the potential impact on activity economy fades. The US Core Personal Consumption Expenditure Price Index will be released on Friday. That inflation indicator, closely watched by the Fed, will be critical for expectations about the path of the Fed’s policy.

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