DALY SEES 'NO URGENCY TO ADJUST THE POLICY RATE'

MNI BRIEF: Fed’s Collins Sees Rate Cuts Later Than Had Thought

MNI BRIEF: China March M2 Slows More Than Expected

MNI BRIEF: China Tightens Stock Market Supervision

MNI BRIEF: China Mar Exports Jump On Demand; Imports Improve

MNI: PBOC Sets Yuan Parity Lower At 7.0967 Fri; -4.87% Y/Y

MNI: BAKER HUGHES US RIG COUNT 617; OIL RIGS 506; GAS RIGS 109

March Home Sales Jumped At End Of Month

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

MNI BRIEF: Lawmakers Signal Tough Hearing For BOC's Macklem

© 1982-2023 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

Fiscal Musings Keep Driving Sharp Sterling Depreciation, Implied Vols Surge

FOREX

Sterling has depreciated this morning as Asia-Pac participants assessed the mini-budget unveiled last Friday, with UK gov't pledging sweeping tax cuts and new spending measures. During his weekend round of interviews, Chancellor Kwarteng dismissed concerns over the sharp fall in GBP and hinted at more tax reductions to come.

  • Cable is hitting session/37-year lows at $1.0705 at typing, which puts the March 1985 record low of $1.0520 within sight. GBP/USD 1-month implied volatility has extended its upswing to 18.1%, its best level since the outbreak of the COVID-19 pandemic in early 2020. EUR/GBP is having a look above GBP0.9000 for the first time since early 2021, with implied vols soaring in kind.
  • EUR confidence may have been boosted by the likely aversion of the worst-case scenario for Italian general election, as the right-wing bloc seems poised to fall short of winning a free hand to amend the constitution, albeit the initial reaction in FX markets was limited.
  • Sterling weakness is aiding the broader U.S. dollar, pushing it to the top of the G10 currency scoreboard. The BBDXY index printed fresh record highs at 1,344 as the greenback becomes the main beneficiary of GBP sell-off.
  • USD strength underpins upswings in the likes of USD/KRW and USD/CNH to fresh cyclical highs as we await the PBOC's yuan reference rate fixing.
  • New Zealand's financial markets are closed in observance of a Memorial Day for the late Queen Elizabeth II.
  • The central bank speaker slate is tightly packed today. President Lagarde headlines a parade of ECB members, while comments are also due from Fed's Bostic, Mester & Logan, as well as BoE's Tenreyro & BoJ's Kuroda. German Ifo survey takes focus on the data front.
Energy BulletsCommodities
Energy BulletsCommodities

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.