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Fed’s hawkish rhetoric fails to lift the dollar; Aussie jumps via Reuters




© Reuters. FILE PHOTO: One hundred US dollar banknotes are seen in this illustration taken in Seoul on February 7, 2011. REUTERS/Lee Jae-won

Written by Ray Wei

SINGAPORE (Reuters) – The dollar struggled higher on Thursday even though federal policymakers reiterated their commitment last month to fighting inflation, while the dollar rebounded after China eased restrictions on Australian coal imports.

Minutes of the Fed’s December monetary policy meeting released last night showed that while officials agreed the central bank should slow the pace of aggressive rate hikes, they remained focused on curbing inflation, and were concerned about any “misperception” in financial markets. that their commitment was declining.

Minneapolis Federal Reserve Chairman Neel Kashkari also said on Wednesday that he sees the Fed’s target interest rate peaking at 5.4%, higher than current market expectations of just under 5%.


However, that failed to give a boost to the greenback, which was down 1.4% against the Canadian dollar overnight.

The pound sterling last settled at $1.2062, after rising 0.76% against the dollar in the previous session, while the euro rose 0.19% to $1.0624, after gains of more than 0.5% overnight.

said Ray Attrell, head of foreign exchange strategy at National Australia Bank (OTC: (NAB) ).

Economic data released on Wednesday also revealed that US employment declined less-than-expected in November, although a survey from the Institute for Supply Management (ISM) showed US manufacturing activity contracted again in December.

“With the payroll coming up on Friday, the message is still that the job market is still in very good shape,” Atrell said.


Against a basket of currencies, it fell 0.14% to 104.06, after falling 0.5% on Wednesday.

The Australian dollar rose 1.7% overnight after news that China’s state plan allowed three central government-backed utilities and its largest steelmaker to resume coal imports from Australia, in the first such move since Beijing imposed an informal ban on coal trade with Canberra in 2020. .

The Australian dollar finally settled at $0.6835, while it rose 0.11% to $0.6298, after rising 0.7% in the previous session.

“The Australian dollar has clearly benefited from the coal story,” said NAB’s Atrell, adding that most other commodity currencies were supported.

The Japanese yen rose 0.5% to 131.97 per dollar on Thursday, reversing a 1.2% decline overnight, as traders bet the Bank of Japan may give up its controversial yield curve grip.


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Heralds the return of a new normal | financial times





This article is an on-site version of The Week Ahead newsletter. Participation here Get our newsletter sent straight to your inbox every Sunday

Hello, and welcome to the first full work week of the new year.


How are your events going in 2023? Amid the economic gloom and ongoing conflict in Ukraine, there are signs that things are returning to normal. The Golden Globe Awards are back this week at their Los Angeles home, after interruptions over a lack of diversity led to the event’s cancellation last year. Looking ahead, world leaders, business leaders and economic thinkers will begin arriving in the Swiss resort of Davos on Sunday for the following week’s World Economic Forum.

The next seven days also see the official start of the fourth quarter earnings season, starting with Wall Street banks and British retailers. This will of course remind us that we are far from returning to normal for the global economy – more details below.

For the UK, normal for now means a large-scale industrial move. Ambulance workers and driving instructors stage more strikes this week, while the strike closes ballots for teaching unions in England and Wales.

At least normal life has been restored in Congress. Focus can now focus on the economic challenges this year will bring – more on upcoming data announcements this week below.

Japanese Prime Minister Fumio Kishida will tour the capitals of the G7 countries this week, to consult with his counterparts to agree on topics for this year’s summit in May, something he has made a major item on his political agenda this year. Kishida personally convened the summit in his hometown of Hiroshima.


Can things search? Yes, if you are in Cornwall. Monday promises to be a historic day for the uk boycott – at least according to the Virgin Orbit press release – with the launch of the first space satellite from mainland Britain. It is perhaps best described as a classic British eccentric as nine satellites will be launched into orbit using a rocket launched from a re-purposed Boeing 747, which is due to take off from Newquay airport on Monday night. He certainly shows a degree of creativity and should at least boost British morale.

Thanks to those who responded to the alternative guide last week for next year and for your comments about our regular newsletter. Send me an email to or by clicking reply if you received this via email (see subscription details here).

Economic data

Expect the Consumer Price Index (CPI) and other inflation data over the coming days from the US, China, Japan, Australia, Brazil and Mexico.

The British Retail Consortium updates its monthly survey of UK high street sales on Tuesday, while on Friday the Office for National Statistics publishes its monthly GDP estimate to give an idea of ​​where the country stands in terms of recession.

Monetary policy this week comes from the Bank of Korea, which is expected to raise its benchmark interest rate by another 25 basis points to 3.50 percent on Friday.



Who likes high interest rates? Banks, that is. That will become evident this week when several of Wall Street’s largest lenders reported fourth-quarter numbers on Friday.

These companies profited from Fed tightening by raising loan rates more than deposits. Analysts estimate c. B. Morgan ChaseAnd American bankAnd Citigroup And Wells Fargo to report collective net interest income for the final three months of 2022 at nearly $60 billion, up 30 percent year-over-year, according to consensus data compiled by Bloomberg. The concern is that this revenue-raising party cannot continue and net interest margins have peaked.

The flip side of rising interest rates is the problem of high inflation, which brings me to the other topic on the corporate calendar this week: retailers.

Increased exit prices may seem like a good thing for retail traders. Not when inflation reaches double digits, it isn’t. We’ll find out exactly how bad it was over the Christmas period – or indeed whether stocking up to watch the World Cup provided any kind of boost – via trading updates from British street and online brands this week.

Consumer spending could of course be better than expected next one showed last week. Games Workshopwhich announces first-half results on Tuesday, is generating a lot of excitement (and not just Ben Dungeons & Dragons nerdy teens) about growth opportunities due to the sharp rise in role-playing games during the pandemic. Investors (as well as teens) expectations have been raised even more recently for a fantasy game product Amazon TV and Movie Deal.


Major economic reports and company reports

Below is a complete list of what to expect in terms of company reports and economic data this week.


  • Germany, monthly industrial production data

  • Mexico, December Consumer Price Index Inflation (CPI) data

  • US monthly consumer credit numbers

  • results: Tata Advisory Services Q3


  • The World Bank releases the winter edition of its Global Economic Prospects, its biannual World Economic Outlook

  • France, Monthly Industrial Production Figures

  • United Kingdom, Office for National Statistics Publishing Interactive maps For data from the 2021 Census of England and Wales down to local authority and community level

  • UK consumer spending data, Barclaycard

  • UK Retail Controller, British Retail Consortium- KPMG

  • UK Jobs Report, Employment and Employment Consortium-KPMG

  • United States, ex-brother Coinbase Production Manager, Nikhil Wahidue to be sentenced today after guilt in September Insider trading fees

  • results: Games Workshop H1, Robert Walters Q4 Trading Update


  • Italy, Monthly Retail Sales Figures

  • Mexico, industrial production data for November

  • United kingdom, Heathrow Monthly traffic figures for December

  • results: bars circulation update, fireexpo Q4 production report, Grafton circulation update, Jaguar Land Rover sales update, JD Sports christmas trading statement, Page group Q4 Trading Update, Sainsbury’s trading statement Q3, Tops Tiles Trading Statement Q1


  • China, data on China’s inflation rate, consumer price index and producer prices for December, in addition to trade balance data for December

  • France, December CPI and the Harmonized Index of Consumer Prices (HICP) inflation rate data

  • Germany, Unemployment Claims Numbers

  • India, CPI inflation data for December

  • Japan, trade balance data for November (AM local time)

  • US inflation data, consumer price index for December

  • results: Asus circulation update, Retail Express Q1, Hafords Q3 Trading Update, John Wood Fiscal year trading update, Marks and Spencer christmas trading update, n brown trading statement Q3, persimmon circulation update, Tesco Q3 and Christmas trading update, TSMC Q4, whitcool Q3 Trading Update


  • France, the final monthly inflation rate in the consumer price index and industrial production figures

  • Germany, Rapid Annual GDP Numbers

  • South Korea, monetary policy committee rate setting meeting

  • UK, November GDP estimates and Goods Trade Balance figures

  • results: American bank Q4, Bank of New York Mellon Q4, Black stone Q4, Citigroup Q4, Delta Airlines Q4, DFS Furniture h1 trading statement, c. B. Morgan Chase Q4, Taylor Wimby trading update, United Health Group Q4, Wells Fargo Q4

world events

Finally, here’s a rundown of other events and milestones this week.


  • Japan, a public holiday on Old Age Day, celebrates those who turn 20 in the 12 months to April 1 this year.

  • Mexico, President Andrés Manuel López Obrador hosts the North Summit with counterparts from the United States and Canada at the National Palace in Mexico City. The event will conclude on Wednesday with a bilateral meeting between López Obrador and Canadian Prime Minister Justin Trudeau.

  • The UK and members of the Public Services and Commercial Services Union of the Rural Payments Agency and the DVLA in Swansea will be locked in an ongoing dispute over salaries, pensions, job security and redundancy terms. Separately, the NASUWT teachers’ union is closing a voting strike among members working in schools and Year 6 colleges in England and Wales, recommending that they vote in favor of the pay strike.

  • United Kingdom The first orbital launch from mainland Britain is set to take place from Cornwall Airport in Newquay, where Virgin Orbit is using a repurposed Boeing 747 to launch a rocket carrying nine satellites into space.


  • Sweden, Bank of England Governor Andrew Bailey chairs a panel discussion on central bank independence and potential future risks at an event Hosted by the Swedish Riksbank.

  • United States, the 80th Golden Globe Awards returns after a year off. The Los Angeles ceremony in particular took place in 2022 amid a boycott by actors and media companies over the lack of diversity in the Hollywood Foreign Press Association membership.



  • European Union President Ursula von der Leyen is leading the European Commission’s visit to Sweden to discuss the country’s priorities during the bloc’s presidency, which began this month.

  • The UK, NHS England publishes figures for November and December, along with quarterly waiting time data for A&E attendance and emergency admissions.

  • UK Other rail strikes over wages, this time by TSSA union members at Rail for London Infrastructure, operator of London’s new Elizabeth Line service.


  • Czech Republic, the first two-day elections to determine the country’s next president and head of state. Incumbent President Milos Zeman will not be able to run again after serving two five-year terms, but former Prime Minister Andrej Babić has confirmed his candidacy.

  • The UK and the National Education Union are closing a wage strike among some 300,000 teachers and support staff in England and Wales.

  • The United States, the Trump Organization is due to be sentenced after the ex-president’s real estate firm indicted in December on tax fraud charges.

  • US and Japanese Prime Minister Fumio Kishida meets with US President Joe Biden at the White House, wrapping up a week of visits to five G7 countries to build consensus on the economic group’s annual summit this year, which Japan will host in May.



Broken times Document changes in business and the economy between COVID and conflict. Participation here

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Pakistan Seeks Help Reconstructing $16 Billion From Floods At UN Conference By Reuters





© Reuters. FILE PHOTO: A displaced girl holds a water bottle she has filled from floodwaters stranding them, while her family takes refuge in a camp in Sehwan, Pakistan September 30, 2022. REUTERS/Akhtar Soomro/File Photo

Written by Emma Farge and Gabrielle Tetro-Farber

GENEVA (Reuters) – Pakistan and the United Nations will hold a major conference in Geneva on Monday aimed at galvanizing support for the country’s rebuilding after devastating floods, in what is expected to be a major test case for who pays for climate disasters.

Record monsoon rains and melting glaciers last September displaced about 8 million people and killed at least 1,700 in a disaster blamed on climate change.

Most of the waters have now receded, but the reconstruction work, estimated at about $16.3 billion, to rebuild millions of homes and thousands of kilometers of roads and railways is just beginning, and millions more may slip into poverty.


Islamabad, whose delegation is headed by Prime Minister Shehbaz Sharif, will present a “framework” for recovery at the conference at which UN Secretary-General Antonio Guterres and French President Emmanuel Macron are scheduled to speak.

Guterres, who visited Pakistan last September, had described the devastation in the country as a “climatic massacre”.

“This is a pivotal moment for the international community to stand with Pakistan and commit to a resilient and inclusive recovery from these devastating floods,” said Knut Ostby, Pakistan Representative for UNDP in Pakistan.

Additional financing is critical for Pakistan amid growing concerns about its ability to pay for imports such as energy and food and to meet sovereign debt obligations abroad.

However, it is not at all clear where the reconstruction funds will come from, particularly given the difficulties of raising funds for the emergency humanitarian phase of the response which is about half funded, according to UN data.


At the COP27 meeting in Egypt in November, Pakistan was at the forefront of efforts that led to the creation of a “loss and damage” fund to cover climate-related devastation for countries that contribute less to global warming than rich nations.

However, it is not yet known if Pakistan, which has an economy of $350 billion, will be eligible to benefit from this future financing.

Organizers say about 250 people are expected to attend the event, including high-ranking government officials, private donors and international financial institutions.

Khalil Hashmi, Pakistan’s ambassador to the United Nations in Geneva, said Islamabad was willing to pay about half of the bill but hoped to get donor support for the rest. “We will work to mobilize international support through various means,” he said. “We look forward to working with our partners.”

An International Monetary Fund delegation will meet Pakistan’s finance minister on the sidelines of the conference, a spokesman for the bank said on Sunday, as Pakistan struggles to restart its bailout programme.


The International Monetary Fund has not yet approved the release of $1.1 billion that was due to be disbursed in November last year, leaving Pakistan with only enough foreign exchange reserves to cover one month’s imports.

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Will the data reveal that US inflation has cooled again?





Did US consumer price growth slow again in December?

Investors and economists are betting that the Fed’s aggressive monetary campaign will cause consumer price growth to slow again in December.

On Thursday, the Bureau of Labor Statistics will release consumer price index data for the previous month. Market participants surveyed by Refinitiv expected prices to have risen 6.6 percent year-on-year in December, down from a 7.1 percent increase in November. This marks the slowest pace since October 2021. Consumer prices are expected to remain flat on a monthly basis compared to an increase of 0.1 percent in November.

John Hill, a strategist at Barclays, said the decline is expected to be partly driven by lower energy prices, which included gasoline, which fell 13 percent in December.

The core CPI, which excludes the volatile food and energy components, is expected to rise 5.7 percent year-on-year, up from 6 percent in November.


These moves will come at the end of the year in which the Federal Reserve raised interest rates from near zero to a range of 4.25 to 4.5 percent. The effects of the historical pace of increases have been rather sluggish: inflation peaked in June, but continued to rise above 8 percent through September.

December inflation data will be an important piece of information for the Fed’s two-day meeting starting on January 31 and could help determine whether the central bank raises interest rates by 0.5 percentage point, matching last month’s increase, or slowing the pace of increases further. . Kate Duguid

What will the industrial production data reveal about the manufacturing sector in Europe?

The past year was difficult for many European manufacturers and conditions are unlikely to improve much in November, when industrial production was expected to suffer its second consecutive monthly decline.

The energy crisis triggered by Russia’s invasion of Ukraine, combined with continued disruption to global supply chains and weak economic growth, has made 2022 a difficult year for many industrial clusters in Europe.

Economists polled by Reuters expect industrial production in the euro zone to have fallen 0.2 percent when those figures are released on Friday. Earlier in the week, national figures for Germany, France and Italy — the bloc’s three largest economies — were also expected to reveal slight contractions in industrial production.


The gloomy outlook for the German industrial sector was underlined last week, when factory orders data for November revealed a much larger-than-expected decline of 5.3 percent from the previous month.

However, economists believe that it will take some time before a sharp drop in demand affects production due to the large backlog of orders since the outbreak of the coronavirus pandemic in 2020. Underlining this, sales volumes in German manufacturing remained high in November, rising 2.1 per cent.

“Weak demand is likely to have a weak effect on production,” said Ralf Solven, an economist at Germany’s Commerzbank. “After all, most industrial companies have a large number of orders backlog, which they can now solve.” Martin Arnold

Did the British economy shrink more?

The British economy is expected to continue to struggle at the end of last year under the pressure of high inflation and rising borrowing costs.

Economists polled by Reuters expected the UK’s gross domestic product to have fallen 0.3 percent between October and November, when the data is released on Friday.


Sandra Horsfield, an economist at Investec, noted that the British economy has been on a downward trend since May 2022, when inflation began to rise. The government provided aid to households and businesses facing a cost-of-living crisis, which may have boosted the economy in November.

A reversal of the National Insurance hike that took effect in April 2022 from November onward, which left after-tax paychecks somewhat higher than they were in October, should also support consumers’ ability to spend. Moreover, power generation appears to have rebounded somewhat after weakness in October, as higher-than-normal wind speeds should have fueled industrial production.

But Horsfield said these factors and other government aid absorbed only part of the blow.

Add to that the constraining effect on higher interest rate activity, and the likelihood is that GDP will trend lower for some time – particularly as it spreads [industrial] “The strikes cause some additional disruption,” Horsfield said.

The economy contracted in the third quarter of 2022 and the November data will provide more information about the final quarter. Many economists expect the UK to have already entered a recession that will last for most of 2023.


“The bright side of this particular cloud is that we expect it to help dampen price pressures,” Horsfield said. Valentina Romy

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