‘Super Thursday’ Of Rate Decisons – Action Forex
- Plethora of rate decisions that highlight the divergence of central bank policies (Norges hikes by 25bps; SNB, Taiwan, Philippines, Indonesia hold); Turkey expected to cut despite continues record lows of the Lira currency.
- Focus on upcoming BOE, ECB and BOJ decisions and the potential impact of the Omicron virus variant on decisions.
- Major European Manufacturing PMI readings mixed (Beats: Germany, Euro Zone; Misses: France; In-line: UK).
- German PMI Services suggest the domestic economic recovery came to a halt due to the resurgence of the pandemic.
- New Zealand Q3 GDP Q/Q: -3.7% v -4.1%e; Y/Y: -0.3% v -1.4%e.
- Australia Dec Preliminary Manufacturing PMI: 57.4 v 59.2 prior.
- (19th month of expansion)
- Australia Dec Consumer Inflation Expectation Survey: 4.8% v 4.6% prior.
- Australia Nov Net Employment Change: +366.1K v +200.0Ke; Unemployment Rate: 4.6% v 5.0%e.
- Japan Dec Preliminary PMI Manufacturing: 54.2 v 54.5 prior (11th month of expansion).
- Japan Nov Trade Balance: -¥954.8B v -¥600.3B; Exports Y/Y: 20.5% v 21.0%e; Imports Y/Y: 43.8% v 40.0%.
- RBA Gov Lowe reiterates stance that still a ways from a rate hike, Board prepared to be patient. Separates RBA’s decision on Bond Buying from rate hikes.
- Australia Treasurer Frydenberg issued the Mid-Year Economic and Fiscal Outlook (MYEFO) which cut its GDP outlook while raising the CPI forecasts.
- BOK Gov Lee bi-annual inflation review reiterated view that CPI to stay above 2% for quite some time amid a solid economic recovery and increasing price pressures from global supply bottlenecks. Rate hikes since August would help ease inflation eventually.
- UK Chief Medical Officer Whitty: COVID case records will be broken a lot over next few weeks.
- UK Business leaders said to be calling on the UK govt to come up with a plan and assistance amid the rapid spread of Omicron virus variant. Concerns that that a workers would have to self-isolate furthering disruptions to supply chains.
- UK Tory party 1922 committee leaders said to join the Covid-19 passport rebellion. MP’s said to have been told they can email a letter of no confidence in the PM over Christmas.
- Turkey President Erdogan replaced Deputy Treasury and Finance Ministers Sakir Ercan Gul and Mehmet Hamdi Yildirim; TRY currency hit a fresh record low vs. USD above the 15 handle.
- FOMC left interest rates unchanged (as expected) and to reduce bond purchases by $30B/ month (doubles pace of tapering),. Fed opened the door to raising rates in spring. Dot plots show 3 rate hikes in 2022, 3 in 2023, and 2 more in 2024.
- Fed Chair Powell post rate decision press conference noted that the economic developments and outlook warranted a faster bond taper; Elevated inflation was reason for accelerating taper. Quicker taper would allow Fed to adapt to the economic outlook. On track to end taper by mid-March. Bottlenecks and supply constraints had been larger and longer lasting than anticipated. Inflation to run above 2% goal well into next year; Did expect inflation to decline closer to 2% by end of 2022.
- Indices [Stoxx600 +1.20% at 476.42, FTSE +0.92% at 7,236.53, DAX +1.58% at 15,719.95, CAC-40 +1.07% at 7,002.03, IBEX-35 +1.08% at 8,364.50, FTSE MIB +0.67% at 26,845.00, SMI +1.55% at 12,724.65, S&P 500 Futures +0.53%].
- Market Focal Points/Key Themes: European indices open higher across the board and stayed amply positive as the session progressed; improved risk appetite seen following FOMC meeting within expectations; sectors among those leading to the upside are technology and materials; while laggard sectors include utilities and telecom; UK retail sector under pressure following outlook cut at Boohoo; Schroders confirms Greencoat Capital looking to take stake; Ascential sells MediaLink; focus on series of central bank decisions through rest of the day; earnings expected during the upcoming US session include Accenture, FedEx and Adobe.
- Consumer discretionary: Domino’s Pizza UK & IRL [DOM.UK] +29% (resolution; trading update), boohoo.com [BOO.UK] -13% (trading update).
- Energy: Electricite de France [EDF.FR] -12% (narrows outlook).
- Healthcare: Novartis [NOVN.CH] +4% (buyback), Valneva [VLA.FR] +10% (vaccine data).
- Industrials: Airbus [AIR.FR] +3% (large order), METRO [B4B.DE] -3% (earnings).
- SNB Policy Statement reiterated its language on FX; that the CHF currency remained highly valued and was willing to intervene more strongly in the FX market. It noted that vulnerabilities of the mortgage and real estate markets increased.
- SNB Quarterly SNB forecasts raised its 2021 GDP growth outlook from 3.0% to 3.5% and set the 2022 GDP growth at 3.0%. It raised the 2021 CPI from 0.5% to 0.6% and 2022 CPI from 0.7% to 1.0% but remained well below the 2% target.
- SNB President Jordan post rate decision press conference noted that the real trade-weighted exchange rate for CHF currency (Franc) had hardly changed since the start of the pandemic. Believed that Swiss inflation had peaked and will decline in 2022.
- Norway Central Bank (Norges) Policy Statement noted that the decision to hike by 25bps was unanimous and saw a gradual rise in policy rate in the coming years. It forward guidance saw another rate hike as likely being in March.
- Norway Central Bank (Norges) Gov Olsen post rate decision press conference noted that the outlook had little changed since Sept.
- German Chancellor Scholz stated that the EU Leader Summit to stress that Ukraine’s border must not be violated.
- Germany Debt Agency on 2022 issuance: To sell approx €410B in debt in year (2nd highest on record).
- Swiss KOF Institute Winter Economic Forecast raised its 2021 GDP growth from 3.2% to 3.9% while cutting the 2022 GDP growth from 3.6% to 3.0%. KOF Raised 2021 CPI from 0.5% to 0.6% and 2022 CPI from 0.6% to 0.8%.
- German VCI (Chemical Industry Association): Maintains 2021 Production +4.5% y/y, prices +8.5% y/y, Rev +15.5% y/y.
- Russia govt spokesperson Peskov stated that was prepared to begin Security talks and provided the US with two drafts for discussion. Inflation was high and remained a concern.
- Philippines Central Bank (BSP) Policy Statement noted that it saws higher baseline CPI forecast for both 2021 and 2022 with risks being balanced for 2023. Maintained its support for the economy but mindful of inflation risks; prepared for any potential 2nd round effects on supply and CPI. Saw economic growth on former footing.
- Indonesia Central bank (BI) Policy Statement noted that the decision to keep policy steady was consistent with need to keep IDR currency (Rupiah) stable amid global uncertainty and low inflation outlook. To optimize policy mix to maintain stability and support the economic recovery. The 2022 monetary policy would focus on pro-stability and other tools would be pro-growth.
- Indonesia Central Bank (BI) Gov Warjiyo pre-rate decision press conference noted that Q4 GDP growth was seen improving with…
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