Daily FX Update: Powell's speech set to signal Fed downshift – Silicon Valley Bank

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Source: Bloomberg
Growth in the UK has slowed sharply in 2022. That’s partly due to one-off factors such as extra bank holidays, However the main underlying cause has been the hit to living standards from high inflation. The latest GDP data point to a contraction of 0.2% in the third quarter of this year, with further decline next year.
The UK is set to relax rules that require banks to separate their retail services from investment banking activities as part of government efforts to deregulate the City of London. UK business confidence dropped in both the CBI and Lloyds survey, highlighting the worsening economic outlook.
Euro-area headline inflation will be the last inflation check for the ECB ahead of the final meeting of 2022. The consensus is that CPI will moderate this month to 10.4% down from 10.6% last month. Both German and Spanish inflation decline more than expected yesterday.
The House of Representatives plans to bring forward legislation that will prevent a strike by freight rail workers. The strike could stress supply chains across the US.
Markets will keep their attention trained on Powell’s comments later on the economy and the labour market. He is widely expected to signal that the next Fed rate hike will be smaller 0.5% jump than last months 0.75% jump.
China’s Caixin manufacturing PMI indicates further weakening of global demand. The gauge has dropped further into contractionary territory, down to 48.0 from 49.2. Fresh unrest over Beijing’s covid-zero policy occurred last night.
Bank of Israel Governor Amir Yaron says that while interest rate hikes may be painful, especially to lower-income households, those who try to find “miracle solutions” could create risks undermining the business and legal environment.
Jerome Powell speaks
Beige Book
Euro-Area PMIs
US 3Q GDP
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