What's Making the Headlines Today
- GBP sinks as inflation surprised the market coming in hot for a second month in a row.
- CPI data remains unchanged at 8.7% and core jumps to 7.1%
The problem of stagflation fears for the UK economy are now setting in, causing the GBP to tumble even though the terminal rate for GBP is now expected shy of 6% - a considerable increase from its current level.
The odds for a 25bps or 50bps rate hike is now sitting at 50/50.
The impact for a higher inflation reading is normally positive for the currency, however, not at the expense of the economy.
JPY is currently the weakest currency in today's market, on the back of the BoJ Governor Ueda reversing the comments of the finance minister yesterday, highlighting that the policy will remain.
This has seen JPY hand back yesterday's gains.
The first of Fed Chair Powell's testimony will be taking place today, and the same time tomorrow.
The fact that Powell spoke at the FOMC press conference last week for 2 hours lessens the chance of new information coming out.
However, the questions remains: will Powell try to reiterate the Fed's hawkish stance on the market?
If that's the case, this could put some upside pressure on both USD and US10Y.
Gold has slumped after new home statistics yesterday, and continued to slide today even though the US10Y hasn't really moved.
Tip from our analyst: Key area to watch will be $1930
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