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CEE FX Little Changed on Day; USD/ILS at Highest Since Mar 2020

CROSS ASSET
  • G10 focus remains on GBP: having rallied on inflation data, GBP/USD has completely reversed course on a subsequent yield spike, as markets factor a longer, protracted BoE tightening cycle. NZD and AUD are the notable underperformers in G10 following the deceleration in rate hikes by the RBNZ and unexpected signal that no further policy tightening would be needed to tame inflation.
  • In EM, the likes of HUF, PLN and CZK face pressure early on in-line with the downtick in the EUR. USD/ILS trades at its highest level since March 2020 following yesterday's notable spike higher triggered by domestic developments and growing geopolitical tensions. The SARB, CBRT and BI rate decisions take focus this week in EM:
  • Bloomberg report that speaker Kevin McCarthy left the US Capitol late Tuesday afternoon saying the two parties had yet to reach a deal to avert a first-ever US default, and a top negotiator said there are no more meetings planned.
  • German IFO data for May and US MBA Mortgage Applications headline the session later today.

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