ECB’s Rehn: Pace of rate hikes depends on how the economy develops 0 (0)

<p style=““ class=“text-align-justify“><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-holzmann-endorses-another-75-bps-rate-hike-in-december-20221122/“ target=“_blank“>Conflicting communique</a> from ECB policymakers will keep things in limbo for now but we should get a better idea of things in the weeks to come, also after the next set of inflation numbers at the end of the month. If anything else, we should get the usual „leaks“ before the next policy meeting in December.</p>

This article was written by Justin Low at forexlive.com.

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Equities tilt slightly higher as broader market sentiment holds up 0 (0)

<p style=““ class=“text-align-justify“>After a retreat in the risk optimism since the latter stages of last week, we’re seeing a pause today with broader market sentiment slightly on the better side in European trading. Regional indices are up between 0.5% to 0.9% mostly with S&P 500 futures also seen up 9 points, or 0.2%, currently.</p><p style=““ class=“text-align-justify“>Elsewhere, 10-year Treasury yields are down 3 bps to 3.796% and the overall mood is pinning the dollar slightly lower so far on the session. I’ll post some charts up in a bit but the light retreat today in the dollar so far doesn’t really take away the progress made yesterday as outlined <a target=“_blank“ href=“https://www.forexlive.com/news/the-tide-is-turning-back-in-favour-of-the-dollar-again-20221121/“ target=“_blank“>here</a> at the time. Here is a quick snapshot in the meantime:</p>

This article was written by Justin Low at forexlive.com.

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Global slowdown to hit Europe the hardest – OECD 0 (0)

<ul><li>Central scenario is not for a global recession</li><li>But a significant growth slowdown in 2023, as well as still high but declining, inflation</li><li>Europe to be hit the hardest amid the worst energy crisis since the 1970s</li><li>Further tightening of monetary policy is essential to fight inflation</li><li>Sees global growth of 3.1% in 2022, 2.2% in 2023, 2.7% in 2024</li><li>Sees US growth of 1.8% in 2022, 0.5% in 2023, 1.0% in 2024</li><li>Sees Eurozone growth of 3.3% in 2022, 0.5% in 2023, 1.4% in 2024</li><li>Sees UK growth of 4.4% in 2022, -0.4% in 2023, 0.2% in 2024</li><li>Sees Japan growth of 1.6% in 2022, 1.8% in 2023, 0.9% in 2024</li><li>Sees China growth of 3.3% in 2022, 4.6% in 2023, 4.1% in 2024</li></ul><p style=““ class=“text-align-justify“>Considering the fallout from the Russia-Ukraine war and surging price pressures across the globe, the outlook presented isn’t so much so a surprise. I would argue the only real thing to watch will be whether or not we will see a significant decline in inflation as is currently being pointed out by almost all quarters of the market. If that doesn’t come to fruition, pretty much everything else gets thrown out the window.</p>

This article was written by Justin Low at forexlive.com.

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Beijing says will tighten requirements for Covid testing from 24 November 0 (0)

<p style=““ class=“text-align-justify“>This will require negative test results within 48 hours for those wishing to enter public places, which includes shopping malls, hotels, government buildings, and factories.</p><p style=““ class=“text-align-justify“>Well, the developments this week certainly is a blow for the hopefuls and the optimists but the general thinking is that China will still eventually move towards some form of pivot away from its zero-Covid policy around the middle of next year. For now, we can only wait and see until then.</p>

This article was written by Justin Low at forexlive.com.

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Risk stays sluggish ahead of North America trading 0 (0)

<p style=““ class=“text-align-justify“>Market hopes were dealt a bit of a setback as negative COVID-19 developments in China is weighing on the mood today, keeping equities slightly on the backfoot. In turn, the dollar is out ahead as the lead gainer among major currencies as it seeks to build on the recent recovery momentum from the latter stages of last week:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/dollar-technicals-still-sorting-its-feet-out-for-now-20221121/“ target=“_blank“>Dollar technicals still sorting its feet out for now</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-moves-higher-as-dollar-sentiment-continues-to-recover-20221121/“ target=“_blank“>USD/JPY moves higher as dollar sentiment continues to recover</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/dollar-on-the-mend-in-european-morning-trade-20221121/“ target=“_blank“>Dollar on the mend in European morning trade</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/the-tide-is-turning-back-in-favour-of-the-dollar-again-20221121/“ target=“_blank“>The tide is turning back in favour of the dollar again</a></li></ul><p style=““ class=“text-align-justify“>It is still early in the week and markets are still finding its feet but bear in mind that trading interest this week will be cut short amid the Thanksgiving holiday on Thursday.</p><p style=““ class=“text-align-justify“>For equities, the S&P 500 index remains a key chart in dictating what might come next. It is either we get a firm break above 4,000 and the 61.8 Fib retracement level or a drop back below the 100-day moving average (red line):</p>

This article was written by Justin Low at forexlive.com.

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The tide is turning back in favour of the dollar again 0 (0)

<p style=““ class=“text-align-justify“>The change in near-term sentiment for the dollar isn’t just confined to EUR/USD so far today, as pointed out <a target=“_blank“ href=“https://www.forexlive.com/news/dollar-on-the-mend-in-european-morning-trade-20221121/“ target=“_blank“>here</a>. The dollar is higher across the board and we are also starting to see some shifts in the near-term bias to be more bullish for the greenback in some dollar pairs. Here’s a quick glance at things.</p><p style=““ class=“text-align-justify“>USD/JPY is also now breaking past its own 200-hour moving average (blue line) at 141.10, as buyers look to seize back near-term control. At the same time, they are also pushing past the 100-day moving average at 141.00 so this is looking more and more like a return towards 145.00 potentially for the pair – at least from a technical perspective.</p><p style=““ class=“text-align-justify“>AUD/USD has also dipped back below its own 200-hour moving average (blue line) at 0.6650 and is down 0.9% to 0.6615 currently. That indicates sellers are back in near-term control after the rejection at the key technical resistance pointed out <a target=“_blank“ href=“https://www.forexlive.com/news/dollar-technicals-still-sorting-its-feet-out-for-now-20221121/“ target=“_blank“>here</a> earlier.</p><p style=““ class=“text-align-justify“>One pair that has been slightly ahead is USD/CAD as buyers held a defense of the 100-hour moving average (red line) last week before pushing past the 200-hour moving average (blue line) again after the first attempt stalled at 1.3400. With oil also on the softer side, the loonie is failing to impress as price now looks to solidify a move back above 1.3400 – after the bounce off the 100-day moving average <a target=“_blank“ href=“https://www.forexlive.com/news/dollar-technicals-still-sorting-its-feet-out-for-now-20221121/“ target=“_blank“>here</a>.</p>

This article was written by Justin Low at forexlive.com.

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Russell 2000 technical analysis In 30 seconds 0 (0)

<p>Watch the following technical analysis for Russell 2000 (30 second video):</p><p>The area close to 1800 seems to be a ‚magnet‘ pulling the price to it. If and when it gets to the double support shown within the video, watch for shorts to cover and early bulls to take some Long bets. That spot introduces an attractive reward vs risk ratio for the bulls. However, if the price continues to fall, then we might have a confirmed bear flag broken to the downside.</p><p>Will Russell be getting worse as shown below by Bloomberg, or will it stop close to 1800? </p><blockquote class=“twitter-tweet“ data-lang=“en“ data-theme=“dark“><p lang=“en“ dir=“ltr“>Russell 2000 Capitulates: The small cap-heavy index is down 20% from November highs, on track to enter bear market. More than one-fourth of the index’s components had hit 52-week lows on Friday – the highest reading since March 2020 <a target=“_blank“ href=“https://t.co/2AT7Djugqg“>https://t.co/2AT7Djugqg</a> <a target=“_blank“ href=“https://t.co/vmzyA7EveF“>pic.twitter.com/vmzyA7EveF</a></p>— Bloomberg (@business) <a target=“_blank“ href=“https://twitter.com/business/status/1485691117513412608?ref_src=twsrc%5Etfw“>January 24, 2022</a></blockquote><p>I will be looking for a Long if Russell 2000 futures gets close to 1800. Why? At that price, my stop would fairly close but my profit target would being further out, and, thus, interesting. Watch the double support on the technical chart as shown in the video. Also watch for possible comments below. In any case, this is all just my opinion, and not a trade recommendation.</p><p>Trade Russell 2000 futures at your own risk. See <a target=“_blank“ href=“https://www.forexlive.com/technical-analysis“>ForexLive.com technical analysis for addtitional perspectives</a>.</p><p>As per the Nasdaq futures (NQ) on the hourly timeframe, price might be breaking down this potential bear flag. If so, that might be adding or synchronizing the pressure on the Russell 2000, as well.</p><p>Chart by TradingView, where one can get additional <a target=“_blank“ href=“https://www.tradingview.com/ideas/russell2000/“>technical analysis ideas on the Russell 2000 futures (RTY)</a>.</p>

This article was written by Itai Levitan at forexlive.com.

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FBS: Oil’s future after the new sanctions 0 (0)

<p>Even if you don’t follow global politics, you probably know about the war in Eastern Europe. These events have influenced various financial assets, oil in particular. In this article, FBS analysts explain what’s going on with crude prices and how the situation may change in the weeks ahead. </p><p>Europe strikes back</p><p>After the Russian invasion of Ukraine and the illegal annexation of the Donetsk, Lugansk, Zaporizhzhia, and Kherson oblasts, new international sanctions joined those of 2014 after the annexation of Crimea and the non-implementation of the Minsk agreements.</p><p>The sanctions focused on reducing Russia’s income to prevent it from further financing the war through its primary source of income, the Oil Industry. The steps taken by the Western nations include prohibiting exporting to Russia any technology, machinery, and goods related to energy, transport, aerospace, and other industries, preventing the updating and modernization of national industries.</p><p>A new package of sanctions adopted by the European Council in June and October 2022 enters into force on December 5. For refined petroleum products, the measures start in February 2023. </p><p>What do the new sanctions on Russian oil mean?</p><p>As agreed with the G7, the EU now bans the purchase, import, or transfer of oil and certain oil products from Russia and shipping to third countries of such products originating in or exported from Russia. The exception occurs if the oil or derivative products are purchased at or below a pre-established ceiling price.</p><p>Additionally, an insurance limitation is included since shipping, insurance, technical, or financial assistance companies will not be allowed to provide services to tankers carrying Russian crude unless it is sold under the new price standard. </p><p>What is the estimated price cap?</p><p>According to analysts‘ estimates, the price of the Russian oil standard should settle at around $60/b. However, Russia has made it clear that it has no intention of selling at such a price. As a result, the country will have to develop new supply chains as alternatives to the new rules. </p><p>What will happen before December 5?</p><p>On October 31, the US clarified that any cargo of Russian origin loaded before December 5 and discharged before January 19 is not subject to the maximum price. As a result, there will be a margin for maneuvering to adapt to the new rules. </p><p>What is Europe doing?</p><p>Although 90% of Russian oil imports to Europe are carried out by sea, the remaining 10% will have a temporary exception since this oil arrives through the Druzhba pipeline to those EU member states that depend on Russian supply and have no viable alternative options. </p><p>Europe has already undertaken a considerable change in its oil trade. The region diversified its suppliers, preferring European sources to not depend too much on any single country. Saudi Arabia, Iraq, and other Middle Eastern nations are already sending more and more crude to Europe because their Asian market share has been declining due to the influx of cheap oil from Russia. </p><p>What awaits crude oil prices in 2023?</p><p>The change in supply chains will provide even more stability and confidence in the European benchmark crude from the North Sea, Brent. The price may decline if supply exceeds demand, as China might reduce its reliance on Western <a target=“_blank“ href=“https://www.forexlive.com/terms/c/crude-oil/“ target=“_blank“ id=“e1f1b115-23d2-48c8-98c8-24024dada457_2″ class=“terms__main-term“>crude oil</a>.</p><p>Considering this, the International Energy Agency (IEA) forecasts that demand growth will slow to 1.6 million bpd in 2023 from 2.1 million bpd this year. </p><p class=“MsoNormal“>Brent crude (<a target=“_blank“ href=“https://fbs.com/trading/specs/xbrusd?utm_source=finance_magnates&utm_campaign=fin_articles&utm_content=oil-after-new-sanctions“>XBRUSD</a>) has been consolidating in a demand zone. From this area, FBS analysts expect in the short term either a bullish rebound to $96 or a bearish continuation below $87.90. The next demand zone is between $82 and $80. Brent may then remain at those lower levels, as demand will seek the lowest price option, preventing the repeat of the recent price escalation.</p><p>Who will benefit from new sanctions against Russia?</p><p>According to data from S&P Global, shipowners from the EU and the G7 accounted for 55% of Russia’s crude exports from the Baltic and Black Sea in September. In addition, shipping insurers in the G7 countries cover around 95% of the global tanker fleet. </p><p>Because of the sanctions, Moscow will have to turn to India, China, and the Persian Gulf to alleviate the shortfall of ships. However, assembling a fleet will take time. While that happens, Russian production may diminish constrained by available shipping capacity, likely increasing pressure on Russia to sell at a limited price to meet Asian demand. </p><p>According to Janet Yellen, US Treasury Secretary, „China and other buyers of Russian oil will now have more leverage to negotiate lower prices.“ She further stressed that „India can continue to buy as much Russian oil as it wants, even at prices above a G7-imposed price cap mechanism, if it moves away from Western shipping, financial, and insurance services bound by the G7 oil cap.“</p>

This article was written by ForexLive at forexlive.com.

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ECB’s Lane: Platform for considering 75 bps rate hike is no longer there 0 (0)

<ul><li>There will be another rate hike in December</li><li>The scale of it should continue to make progress towards the levels needed</li><li>But platform for considering a very large hike, such as 75 bps, is no longer there</li><li style=““ class=“text-align-justify“>The more you’ve already done on a cumulative basis, that changes the pros and cons of any given increment</li></ul><p style=““ class=“text-align-justify“>That’s quite a dovish endorsement and will just add to the dollar recovery sentiment we are seeing today, considering that the Fed remains arguably the most hawkish central bank in town still for the time being.</p>

This article was written by Justin Low at forexlive.com.

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Newsquawk Week Ahead: Highlights include Fed & ECB mins, PBOC, RBNZ, Flash PMI’s 0 (0)

<ul><li>MON: PBoC LPR & Israel Policy
Announcements; German Producer Prices (Oct), US National Activity Index (Oct),
New Zealand Trade Balance (Oct), UK CBI Orders (Nov)</li><li>TUE: EZ Current Account (Sep),
Canadian Retail Sales (Sep), EZ Consumer Confidence Flash (Nov), US Richmond
Fed (Nov), Australian PMIs Flash (Nov)</li><li>WED: RBNZ Policy Announcement,
Japanese Holiday; EZ, UK & US PMIs Flash (Nov), US Durable Goods (Oct),
University of Michigan Final (Nov), US New Home Sales (Oct)</li><li>THU: Riksbank, CBRT & SARB Policy
Announcements, ECB Minutes (Oct), US Thanksgiving; German Ifo (Nov)</li><li>FRI: US early-close, CBRT Financial
Stability Report; UK GfK (Nov), German GDP Detailed (Q3)</li></ul><p class=“MsoNormal“>
NOTE: Previews are listed in day-order

PBoC LPR (Mon): </p><p class=“MsoNormal“>The PBoC’s Loan Prime Rates (LPRs)
are expected to be maintained with the 1yr at 3.65% and the 5yr at 4.30%.
Expectations for an unchanged decision arise from the One-Year Medium-Term
Lending Facility Rate (MLF) being maintained at 2.75%. Desks suggest that China
is walking on a tightrope after the PBoC’s decision in August to lower key rates
accelerated the Yuan’s decline since, whilst the fresh wave of COVID infections
across the nation has hit the raft of activity data from the second largest
economy in the world. “Any fresh monetary policy stimulus will be largely
dependent on credit demand, which tumbled more than expected in October”,
according to ANZ’s China Strategist, who also noted that the PBoC will
“continue to maintain ample liquidity, but chances for an interest rate cut are
low.”

RBNZ Policy Announcement (Wed): </p><p class=“MsoNormal“>The RBNZ is widely expected to
raise its Cash Rate at the upcoming meeting, with 15 out of 23 analysts polled
by Reuters forecasting a 75bps move, while the rest lean towards 50bps. The
calls for a hike come amid hot inflation at 7.2% Y/Y in Q3 – well above the
RBNZ’s 1-3% target – which comes in conjunction with a tight labour market.
ANZ, ASB, Kiwi Bank, BNZ, and Westpac all forecast a 75bps hike on Wednesday.
Analysts at ANZ suggested “The RBNZ has already proven that it’s not in the
least afraid to go its own way, and the global tilt towards slower hikes is
unlikely to play a significant part in the decision… We are forecasting the OCR
to peak at 5.0%, via another 75 bp hike in February on a ‚let’s just get it
done‘ basis. If data cools more rapidly than expected the RBNZ could well slow
the pace at that point.”

Eurozone Flash PMI (Wed): </p><p class=“MsoNormal“>Expectations are for November’s
manufacturing PMI to fall to 46.0 from 46.4, services to decline to 48.0 from
48.6, leaving the composite at 47.07 vs. prev. 47.3. The prior report was
characterised by a deeper decline into contractionary territory as both
manufacturing and service industries lost ground. S&P Global observed
“After a weak third quarter of PMI and official GDP data, the latest survey
results for the start of the fourth quarter suggest the eurozone economy is now
headed for a winter recession”. This time around, analysts at Investec suggest
that “October’s reading points to a weak start to Q4, where we ultimately
expect a contraction in GDP”. The desk adds that “with little in the way of
major news to shift the economic narrative and inflation still high (10.6% in
October) we expect economic conditions to remain weak”. From a policy
perspective, the December meeting is increasingly likely to see a step down
from 75bps to a 50bps increment with hawkish policymakers doing little to talk
up a 75bps move. ING posits “with a view to the December meeting we caution
that the ECB’s hawks might ask for more progress on quantitative tightening in
return for less aggressive action on rates“. Note, a disappointing reading
could refocus minds over the 2023 outlook which sees the deposit rate currently
seen peaking at around 3% in the summer.

UK Flash PMI (Wed): </p><p class=“MsoNormal“>Expectations are for November’s
services PMI to decline to 48.0 from 48.8, manufacturing to fall to 45.5 from
46.2, leaving the composite at 47.8 vs. prev. 48.2. The prior report was
characterised by the service sector slipping from neutral to contractionary
territory, whilst the manufacturing industry contracted at a faster rate than
prior. S&P Global noted “the heightened political and economic uncertainty
has caused business activity to fall at a rate not seen since the global
financial crisis in 2009 if pandemic lockdown months are excluded.“ This
time around, Oxford Economics suggests “there’s a chance that the flash PMIs
for November will have been buoyed by an easing in the financial market and
political turmoil seen after the mini-Budget”. However, the consultancy
cautions that this positivity will naturally be countered by the “still-intense
cost-of-living pressures and very depressed consumer sentiment”. From a policy
perspective, markets price a 50bps December BoE hike at around 85% with the MPC
expected to step back from the 75bps in November. Many desks continue to look
for a scaling back of market pricing in 2023 which currently expects a terminal
rate of 4.5-4.75%.

FOMC Minutes (Wed): </p><p class=“MsoNormal“>At its November confab, the FFR
target was lifted by 75bps to 3.75-4.00%, as expected. The statement was
dovishly received by the market after it stated that the Fed will consider the
“cumulative tightening of monetary policy, the lags with which monetary policy
affects economic activity and inflation, and economic and financial
developments” when determining the pace of future rate increases. Analysts
rationalised that with rates becoming more restrictive, the Fed can downshift
to a slower pace of normalisation to assess the impact of the 375bps worth of
rate tightening unleashed since March. However, Fed Chair Powell’s press
conference injected a hawkish bias after he suggested that it was “very
premature” to consider pausing the course of hiking. The Fed chair said that
the time to slow rate hikes might come as soon as the December meeting, he
impressed that inflation remains well above the Fed’s longer-run goals, with
price pressures evident across goods and services. And although longer-term
inflation expectations still appear well-anchored, the Fed wants to see
inflation coming down decisively, and is prepared to stay the course until the
job is done, with the Fed strongly committed to its inflation target of 2%. He
added that there was still “some ways to go” on rate hikes, while the ‘ultimate
rate level’ might even be higher than previously expected (NOTE: the Committee
forecast a 4.50-4.75% terminal rate in its forecasts). The Fed chair said the
debate on how far to lift rates was the important question, but there was still
ground to cover before the Fed can ‘meet that test’, adding that there is a lot
of uncertainty regarding the lagged impact of policy tightening. These themes
have been largely echoed by officials in wake of the November meeting. And
after CPI and PPI data have eased in October, money market pricing implies a
50bps rate hike in December, with the terminal rate expected to be a little
over 5% by mid-2023 – it is worth noting that for most of this week,
expectations of the terminal rate were sitting between 4.75-5.00% until FOMC
voter Bullard delivered hawkish remarks, where he suggested that rates were not
yet „sufficiently restrictive“, „even under the most generous
interpretation“; Bullard has been a policy leader in the post-pandemic
era, with his hawkishness coming before his other colleagues.

Riksbank Policy Announcement (Thu): </p><p class=“MsoNormal“>The Riksbank is expected to step
down from its recent 100bps hiking level by delivering a 75bps increase despite
guidance for a 50bp hike at the September MPR. A 75bp hike is justified by the
domestic inflation situation remaining hot, as while the headline October
metrics were below market expectations (note, this was almost entirely due to a
drop in electricity pricing), the key ex-energy figure was markedly above both
the market and Riksbank’s consensus and lifted from the prior. While such an
increase could be argued as meriting another 100bp hike, the Riksbank is
unlikely to deliver tightening of this magnitude again given initial signs that
the tightening undertaken thus far is weighing on the domestic economy. Note,
while 75bp is expected the likes of SEB believe that the inflation release has
“significantly” increased the chance of 100bp, though they have maintained
their 75bp call. As it stands, the policy rate is seen peaking in Q3-2023 at
2.52%. Evidently, a 75bp hike would match that forecast and thus the Riksbank
will likely lift its policy rate forecasts; however, the magnitude of this is
likely to be relatively limited in size, given associated tightening headwinds
and the policy transmission lag.

BOK Policy Announcement (Thu): </p><p class=“MsoNormal“>The Bank of Korea is expected to
lift its Base Rate by 25bps to 3.25%, with analysts suggesting that the decline
in the USD/KRW exchange rate gives it scope for a smaller rate hike (recall,
the sharp upside in the USD/KRW rate in September saw the bank implement a
50bps rate hike). Additionally, inflation data rebounded in October, seeing
analysts call for continued monetary policy tightening. SocGen’s analysts added
that the slowdown in activity indicators, as well as the sustained ‚credit
crunch‘ in the corporate credit market has also dimmed the prospect of a 50bps
move. Elsewhere, within its updated projections, the central bank will likely
lower its view of near-term growth, but inflation forecasts are likely to be
maintained, SocGen says.

CBRT Policy Announcement (Thu):</p><p class=“MsoNormal“>The CBRT’s latest monthly survey
of business leaders and economists revealed that those surveyed expect the Repo
Rate to fall from the current 10.5% to 9.0% in the next three months
(previously, they had expected a decline to 9.4%), while the rate is seen at
15.88% in 12-months (vs 15.53% in the previous poll). CPI expectations over the
next year are little changed, with the consensus looking for consumer prices to
close out this year at +68.1% Y/Y. Credit Suisse reminds us that the CBRT’s
policy decisions have not been based on conventional economics. In October, the
Repo Rate was cut by 150bps to 10.50%, and signalled it would cut the rate
again in November despite the challenging inflation situation. „Both the decision
and the guidance at the October meeting followed President Erdogan’s September
statement that he would like to see the policy rate in single digits by the end
of this year,“ CS notes. CS thinks headline inflation will likely increase
further in October-November before slowing to under 70% from December owing to
base effects, „provided that the central bank remains ‚resourced‘ to sell
FX to manage the lira’s exchange rate.“ CS adds that authorities
„will probably continue to implement ad hoc measures as long as they can
in order to sustain what we view as this ultimately unsustainable policy
stance.“ Credit Suisse continues to argue that the CBRT will need to
revert to conventional policy adjustments when its ad hoc measures have been
exhausted, the timing of which will depend on political considerations, with
Presidential and Parliamentary elections due no later than mid-2023.

ECB Minutes (Thu): </p><p class=“MsoNormal“>As expected, the ECB opted to pull
the trigger on another 75bps hike, taking the deposit rate to 1.5%. Interestingly,
the accompanying statement saw policymakers drop their „several
meetings“ guidance with regards to future hikes. Instead, they now expect
„to raise interest rates further“, but without providing a timeframe.
Elsewhere, the GC opted to change the terms and conditions of the third series
of TLTROs and offer banks additional voluntary early repayment dates.
Furthermore, the ECB opted to set the remuneration of minimum reserves at the
ECB’s deposit facility rate (previously the main refi rate). On the balance
sheet, despite some hopes for a tweak to guidance on QT, the Bank made no
changes to its language regarding reinvestments for PEPP and APP. At the
follow-up press conference, Lagarde stated that the GC may need to go beyond
normalisation and despite dropping the word „several“ from the
statement, she conceded that the ECB might need to hike „at the next
several meetings“. On the balance sheet, Lagarde noted that policymakers
did not discuss substantive APP issues, but would pursue a discussion of the
key principles of APP in December, thus disappointing some who may have been
looking for a more timely discussion and implementation of QT in early 2023.
Overall, the dated nature of the release will likely mean there is little for
markets to shape expectations for the December meeting. On which, more timely
interventions from ECB policymakers and source reporting suggest that the GC
will likely raise rates by 50bps in December, whilst commencing the discussion
on QT.</p><p class=“MsoNormal“>For more research like this check out
Newsquawk’s <a target=“_blank“ href=“https://newsquawk.com/daily/article/?id=2742-week-ahead-november-2125th-highlights-include-fed-ecb-mins-pboc-rbnz-flash-pmis&utm_source=forexlive&utm_medium=research&utm_campaign=partner-post&utm_content=weekly“ target=“_blank“ data-saferedirecturl=“https://www.google.com/url?q=https://newsquawk.com/daily/article/?id%3D2742-week-ahead-november-2125th-highlights-include-fed-ecb-mins-pboc-rbnz-flash-pmis%26utm_source%3Dforexlive%26utm_medium%3Dresearch%26utm_campaign%3Dpartner-post%26utm_content%3Dweekly&source=gmail&ust=1668863631560000&usg=AOvVaw05SEBPdx4VVI386JBQU-1P“>live squawk box </a>for 7 days free.</p>

This article was written by Newsquawk Analysis at forexlive.com.

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