Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

Friday Forex Follies: Divergence in he Relative Hawkishness of G10 Central Banks.

By Stephen InnesMarket OverviewNov 25, 2022 02:58AM ET
www.investing.com/analysis/friday-forex-follies-divergence-in-he-relative-hawkishness-of-g10-central-banks-200632777
Friday Forex Follies: Divergence in he Relative Hawkishness of G10 Central Banks.
By Stephen Innes   |  Nov 25, 2022 02:58AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
DX
-0.03%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
EUR/USD
-0.06%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

This week, there is an evident divergence in the relative hawkishness of G10 central banks. ‎While the Fed stepping down from a 75 basis point (bp) hiking pace to 50 bp in December is wholly ‎consistent with its projections, underwhelming survey data point to a faster-than-expected slowing in activity. A heavy calendar of Fed speakers next week, Williams on Nov. ‎‎28 and Powell on Nov. 30 are the highlights, should remain hawkish, trumpeting the ‎Fed's inflation-fighting credentials.

I would expect FX Traders to fade any US dollar strength on these speeches, though, with the market consensus bias to believe that US headline inflation will continue to ease substantially over the next month or two and that the tail risks around plus  5% terminal rate expectations have dropped sharply. After all, a step down to 50 bp in December would be an unambiguous signal that peak hawkishness has ‎passed.

By contrast, the RBNZ's discussion of a 100 bp increase during its hike to 75 bp this week is a ‎hawkish step up. Meanwhile, the ECB's emphasis remains on current inflation rather ‎than the forward-looking ability of weaker activity reducing price pressures after Executive ‎Board member Isabel Schnabel said that "the room for slowing down the pace of interest ‎rate adjustments remains limited." Schnabel's hawkish record notwithstanding, the market can not rule out a 75bp rate ‎hike in December, giving EUR/USD upside further scope to run.

A more attractive global ex-US growth setup heavily depends on expectations around China's reopening. Fading concerns around renewed restrictions would give opportunities to sell USD into year-end, with China-sensitive currencies, AUD, CNH, KRW and THB, standing out.
Friday Forex Follies: Divergence in he Relative Hawkishness of G10 Central Banks.
 

Related Articles

Friday Forex Follies: Divergence in he Relative Hawkishness of G10 Central Banks.

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email