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White House Deese comments on not expecting a dollar-weakening accord – more

Deese was blunt earlier, saying he does not anticipate the need for a global accord to adjust currency values.

Deese referring to the ‘Plaza Accrod’ that drove the USD lower in the back half of the 1980s (the agreement was reached on September 22 1985).

  • “I don’t anticipate that that’s where we’re headed,” Deese said at an event at the Economic Club of Washington, DC when asked whether there was any possibility of a global agreement to adjust currency values, as was reached in 1985.
  • Deese’s rejection of a new version of the Plaza Accord, as the 1985 deal was known, came hours after Treasury Secretary Janet Yellen suggested there was little cause for concern with current moves in financial markets.

The USD has traded more strongly again in Asia today.

usd dxy 28 September 2022

BOJ July minutes. There is not a lot of conviction on inflation, wage rises in these.

From the minutes release, headlines via Reuters:

  • Members shared view market sentiment remains cautious, global slowdown fears heightening
  • A few members said price rises are broadening in japan
  • One member said wage pressures heightening
  • A few members said consumer inflation to slow next fiscal year unless commodity prices continue to rise
  • One member said japan is seeing an increasing chance of achieving sustained rise in inflation
  • Members shared view must closely watch financial, fx market moves and their impact on economy, prices
  • Members shared view rapid moves seen in fx market, must watch carefully impact of such moves on inflation
  • one member said weak yen pressure may ease as global economic slowdown weighs on global inflation, leads to lower long term rates
  • one member said the downtrend in the yen may change into an uptrend is the global economy faces a shock

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These are a bit wishy-washy. They are also from July. They are also preceded by the Summary. Still, FWIW there is little indication of any pivot from the BOJ here. As expected.

Those last two points on the weak yen have not aged well.

Full text: Minutes of the Monetary Policy Meeting on July 20 and 21, 2022

Central banker gabfest in Europe/UK time – BOE, ECB speakers – Lagarde, Cuncliffe + more

First up is European Central Bank President Lagarde at 0715 GMT:

  • in a discussion at Frankfurt Forum on US-European GeoEconomics organised by the Atlantic Council in partnership with Atlantik-Brücke in Frankfurt

0815 GMT Bank of England Deputy Governor Jon Cunliffe keynote speech:

  • at AFME conference about ‘The role of technology in changing the landscape for payments and settlement systems, and the potential applications of CBDC’s in wholesale markets’

1500 GMT:

  • Online introductory remarks by ECB board member Frank Elderson at an event entitled “A European monetary policy for the planet and for the people” hosted by the Greens/EFA in the European Parliament

1800 GMT Bank of England Monetary Policy Committee member Swati Dhingra

  • chairs a panel with Federal Reserve Bank of Chicago President Charles Evans at the London School of Economics

There are Federal Reserve speakers coming up also on Wednesday, 28 September 2022 – I’ll post this separately.

The hot topic amongst central bankers right now is how tough they are on inflation, hiking rates etc. there will be p;plenty of that from this lot, you know the drill.

Fed hikes ahead: Nov: 75bp, Dec 50, Jan/Feb 25. Recession probability now above 50%

Via a research piece from Bank of Montreal, this in brief:

  • The risk of a North American recession over the next year has now climbed above 50%.
  • a moderate downturn in the first half of 2023 in both the U.S. and Canadian economies

Forecasts for the Federal Open Market Committee (FOMC):

  • we are now expecting a 75 bp hike in November
  • 50 bps in December
  • and 25 bps at the first meeting in 2023
  • taking the funds rate to a peak of 4.50%-to-4.75% early next year, a net addition of 25 bps at each one of those three meetings. And then we expect that rate to hold through 2023.

More of this to come then?

usd dxy 27 September 2022

EU member states set to delay Russian oil cap – report

European Union nations are struggling to reach an accord on imposing a price cap on Russian oil and will likely push back a deal on the issue until after a broader sanctions package has been agreed, the report says.

 

You have to wonder if this leaked on Friday. In any case, oil isn’t reacting to this but WTI crude oil remains at $78.37.

The report doesn’t indicate the push is dead and a ban on Russian crude in Europe is already agreed for December 3.

The European Commission met with member states over the weekend to try to find a compromise on the package of restrictive measures, according to the people. Countries may push to have a preliminary deal ahead of an informal gathering of EU leaders in Prague on Oct 6.

I have to imagine that Hungary is one of the countries that’s proving tough to convince.

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