- Federal Reserve officials have stressed since the start of the week the need to get inflation back to its 2% target, with Michelle Bowman saying that she continues to expect further rate hikes to contain persistent inflation. Bond markets now bet on a “dovish pivot” for the seventh time since the central bank started their tightening campaign, with 92 basis points of rate cuts priced in for next year versus the Fed estimate of 50 basis points of easing in 2024.
- The greenback is little changed this morning after advancing 0.3% on Tuesday, as investors wait for a batch of central bankers’ speeches in Europe throughout the day, and more Federal Reserve officials later this week, including Chairman Jerome Powell, Raphael Bostic and John Williams. The Dollar Index trades near 105.70.
- The European economy is unlikely to crash according to the International Monetary Fund. The IMF stated that the economy’s outlook is aiming for a soft landing, with inflation heading towards its target, and GDP gradually improving. The fund has also warned that stabilizing inflation to its normal range could take several years. EUR/USD dropped 0.1% overnight to trade around 1.0690. EUR/GBP continued its three-day rally, currently hovering the key 0.8700 level.
- Sterling is 0.1% lower, currently trading at 1.2270, as UK investors wait for BOE’s Governor Andrew Bailey key speech later today.
- USD/JPY advanced as much as 0.2% to trade near 150.62 as BOJ Governor Kazuo Ueda mentioned that the country’s inflation is still “far-away” from the ideal central bank’s target of 2%.
- USD/CNH rose for the fifth consecutive day, heading to its longest gains streak in 4 months. USD/CNH currently trades at 7.2833 and USD/CNY at 7.2790.
- Oil is lower this morning, with WTI Crude losing 0.2% as the demand from China, the world’s biggest importer, fades.
