Won’t Be Easy for EUR/USD to Push Through Recent Highs

Markets The BoJ’s status quo set the tone for core bond yields right from the start of the trading day. ECB’s Villeroy dismissing rumours about a possible slowdown in the tightening pace from March was brushed aside while US economic data (disappointing retail sales, easing PPI) a bit later only reinforced the current market trend. […]

AUD/USD Slides after Soft Aussie Job Report

The Australian dollar has extended its slide on Thursday. AUD/USD is trading at 0.6884 in Europe, down 0.82%. Australian employment data disappoints Australia’s December employment report was weaker than expected, sending the Australian dollar sharply lower. The headline reading showed a loss of 14,600 in total employment, which may have soured investors. The release wasn’t […]

With the Bank of Japan Sticking to its Ultrasoft Policy, JPY Looks Overbought

The Bank of Japan, which has not changed interest rates for the past six years and remains fully committed to QE, sparked a strong market reaction by leaving policy unchanged today. The Bank of Japan surprised markets at its last meeting by announcing that it would now target a range rather than a specific level. […]

Central Bank Warnings

It’s been a solid start to the year for equity markets but that optimism appears to be fading as policymakers queued up in Davos to push back against market interest rate expectations. Let’s be clear on this, the markets have a much better record over the last 18 months of anticipating shifts in interest rates […]

Will Retail Sales Weigh on British Pound?

The British pound is almost unchanged on Thursday, trading at 1.2342 in the European session. Markets brace for another decline in retail sales All eyes will be on the UK’s December retail sales, which will be released on Friday. The UK consumer has been holding tight to the purse strings, which is bad news for […]

Sunset Market Commentary

Markets: After yesterday’s US-driven decline in bond yields (poor US data), the market focus turned to ECB communication. ECB’s Knot, admittedly a member of the hawkish wing, set the tone by warning that the market should take the ECB’s guidance on multiple 50 bps rate hikes seriously. Speaking later at the WEF in Davos, ECB’s […]

US Data, and the Disinflation Narrative

After months of inflation coming in way above the Fed’s target, the latest releases show a different trend. US monthly CPI figures for December showed a drop in prices, largely aided by energy prices. Yesterday, producer prices came in much more negative than expected. If inflation is bad, then the opposite would be good, right? […]

Why Oil Prices Have Been All Over the Place

The price of crude has been on something of a roller-coaster since the start of the year. From a sudden drop in the first days of January, it climbed through the third week, only to have a hard drop a couple of days ago. Naturally there have been news events that have driven these moves, […]

Inflation Dynamics Point to RBA's Tightening Cycle Peaking after the FOMC

The central issue for the economies and markets will be the evolution of inflation over 2023. Westpac forecasts that headline inflation in Australia will peak at 7.4% in 2022 (December quarterly result to be released on January 25). That read will be an increase from 6.3% in the year to June 2022. We expect headline […]

Cliff Notes: The New Year Brings Optimism Over Inflation

Key insights from the week that was. This week’s data was broadly supportive of confidence, with the risks around inflation and therefore the policy outlook thought to have improved into the new year. Beginning in Australia, the Westpac-MI Consumer Sentiment survey reported another improvement in confidence, the headline index up 5.0% in January to be up 8.1% […]