Given the turbulence in financial markets this week, central bank meetings have become a much closer call. For the Federal Reserve, we narrowly favour a 25bp hike given the tightening lending conditions. For the Bank of England, we also lean towards a 25bp increase as the impact of past hikes has yet to feed through In this article US: A close call, favouring 25bp as of now UK: Bank of England decision on a knife edge Eurozone: Little sign of a strong rebound Switzerland: Central bank will act with caution   Source: Shutterstock US: A close call, favouring 25bp as of now Next week's Federal Reserve policy meeting is a very close call. On the one hand, inflation continues to run hot, the jobs market is strong and Federal Reserve Chair Jerome Powell’s testimony, which opened the door to a 50bp hike, suggested a desire to get interest rates a fair bit higher. However, lending conditions were already tightening and the fallout from recent events surrounding Silicon Valley Bank, Signature Bank and Credit Suisse will only make banks more cautious. Regulators are also likely to recognise the need to be more proactive in this environment, which could in turn feed into more pressure on the banks and greater caution with regards to who they lend to, how much they lend and at what rate. This is a de-facto tightening of monetary and financial conditions in the US which could weigh heavily on economic activity. The Fed may be wary that a no-change response could signal that they have finished tightening and the next move will be lower rates, but they can head that off by signalling in the text that this is a temporary pause and they stand ready to tighten again should conditions warrant it. Moreover, they also have the updated forecasts this month which could continue to show their central tendency is for rates to end the year higher than their current level. Nonetheless, with the European Central Bank hiking rates by 50bp without causing too many market ructions, this is likely to embolden the Fed to move by 25bp. Read next: Fed to hike 25bp should conditions allow| FXMAG.COM UK: Bank of England decision on a knife edge Last month, the Bank of England signalled it might finally be done with tightening, or at least that it was close. It said it would be monitoring signs of “inflation persistence” and hinted the burden of proof was on seeing inflation fall back, rather than vice versa. Since then the data has been encouraging – wage growth is finally showing signs of having peaked, though it’s early days. The Bank’s own Decision Maker Survey has suggested firms’ pricing strategies are becoming less aggressive too. We’ll get one more inflation reading next week before Thursday’s meeting, but last month saw a surprise dip in core services CPI. Until the recent drama in financial markets, and on the basis of recent BoE communications, we felt this data probably wasn’t quite enough to steer the BoE away from a 25bp hike this month, but we also felt that if those encouraging trends continued, the committee could pause in May. We’re still leaning towards that outcome, though clearly a lot can change in the days leading up to the meeting. It’s clear from recent communication that the bar for pausing is much lower at the BoE than at the ECB or the Fed, with officials noting that the impact of past hikes is still largely to feed through. On the flip side, last September/October’s volatility in UK markets after the ‘mini Budget’ saw the BoE use targeted measures to address financial stability issues, which policymakers indicated would allow the Bank’s monetary policy to continue focusing on inflation. We suspect that the philosophy of (at least trying to) separate inflation fighting and financial stability, which was also adopted by ECB President Christine Lagarde this week, will again underpin next week’s decision-making. In short, the meeting is on a knife edge and to a large extent it will come down to whether stability in financial markets starts to return. Either way, expect the committee to remain heavily divided. Eurozone: Little sign of a strong rebound For the eurozone, all eyes will be on the PMI and consumer confidence data for signs about how the first quarter is shaping up. So far, sentiment data has painted a relatively positive picture of the economy in February, but hard data for the first quarter shows little sign of a strong rebound. Also interesting will be the trade balance for January, which has seen big moves in energy import volumes and prices. Switzerland: Central bank will act with caution In Switzerland, since the beginning of the year, inflation has continued to rise and exceed expectations, reaching 3.4% in February, after having fallen in the second half of 2022. As the Swiss National Bank only meets once a quarter and has only raised rates by 175 basis points since the start of the tightening cycle (compared to 350 basis points for the ECB and 475 basis points for the Fed), recent inflation developments in Switzerland argue for a 50 basis point rate hike at the March meeting. A fortnight ago, this was a fairly safe bet, but recent developments in the financial markets have clearly reduced the likelihood of this happening. As Credit Suisse is one of the two largest banks in Switzerland, which implies that the systemic risk is greater there than elsewhere, the SNB will have to act with caution. Ideally, the SNB would like to manage the risks to financial stability with other instruments than interest rates, such as providing liquidity to banks that need it, so that it can continue to use interest rates to fight inflation. For the moment, this seems feasible, but one knows that market conditions can change very quickly. A conflict between the financial stability and monetary policy objectives could emerge, forcing the SNB to act more cautiously in its rate increases. In conclusion, our baseline scenario remains a 50bp rate hike, but the probability of this has seriously diminished, and neither the status quo nor a 25bp hike can be ruled out. Unlike the ECB, the SNB has not pre-announced anything, so it is freer in its choices. Key events in developed markets Source: Refinitiv, ING TagsUS UK Switzerland Eurozone Bank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

We expect the National Bank of Poland to keep rates unchanged next week and believe rate cuts are unlikely this year. For Hungary, we see core inflation continuing its slow-paced ascent, while the trade balance should finally switch back into surplus after being in deficit for 18 months  In this article Poland: NBP expected to keep rates unchanged Czech Republic: Headline inflation expected to slightly exceed central bank forecast Hungary: Headline inflation to show minor deceleration, while core should continue to climb Source: Shutterstock   Poland: NBP expected to keep rates unchanged Poland's central bank is widely expected to keep interest rates unchanged next week. Although recent CPI readings have been lower than expected, the pace of disinflation is highly uncertain and price growth may turn out to be persistently high (especially core inflation) as seen in the recent data from core markets. At the same time, the NBP will present new forecasts which may show a lower path of inflation due to a more favourable starting point and lower energy price index. Still, in our view, the persistence of core inflation will leave no room for interest rate cuts this year.  Czech Republic: Headline inflation expected to slightly exceed central bank forecast Czech headline inflation likely moderated slightly in February. Core inflation likely declined further but should still remain above 10% year-on-year. Weekly surveys suggest food prices remained more or less flat compared to January, while fuel prices started to pick up again. In our view, headline inflation in February slightly exceeded the central bank’s estimate at 16.5% YoY. Still, the Bank's board is unlikely to be swayed by such a move given its firm stance on holding rates steady. Read next: Demand For Automotive Chips Will Continue To Grow As The Outlook For The Electric Vehicle Market Looks Solid| FXMAG.COM Hungary: Headline inflation to show minor deceleration, while core should continue to climb Next week will also serve up some hard evidence on how the Hungarian economy has started this year. We expect some minor improvement in retail sales activity in year-on-year terms due to base effects in January 2023. On a monthly basis, we still see a retreat in the volume of turnover. The main cause behind this weakening remains negative real wage growth. If we believe in survey indicators (which we take with a pinch of salt), we should see yet another monthly-based increase in the volume of industrial production in January. This will translate into a significant improvement compared to a year ago due to the calendar effect. We see the budget balance posting a monthly deficit roughly in line with historic standards in February. The real fireworks of the week will arrive with the February inflation print, where we see the headline reading showing a minor deceleration, while core inflation should continue its (now slow-paced) climb. The reason for the opposite direction of travel is that energy and fuel prices, which are not part of the core basket, will drag down the headline figure. At the end of the week, we foresee yet more good news: with dropping energy prices, lowering energy demand and improving export activity, we see the monthly trade balance switching back into surplus after being in deficit for 18 months. Key events in EMEA next week Source: Refinitiv, ING This article is part of Our view on next week’s key events   View 3 articles TagsHungary EMEA and Latam calendar Czech Repulbic Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

With inflation data undershooting expectations, and GDP growth stalling, we have much more confidence that the Bank of Canada will leave rates unchanged next week. For the UK, the economy is likely to register an overall first-quarter GDP decline, and we expect a technical recession in the first half of this year In this article US: Job growth set to moderate after debatable January employment surge Canada: Bank of Canada to keep rates on hold UK: GDP still set for first quarter decline, despite likely January rebound Source: Shutterstock   US: Job growth set to moderate after debatable January employment surge Financial markets are fully buying into the Federal Reserve’s higher-for-longer narrative on interest rates with the US 2Y Treasury yield fast approaching 5% and the 10Y breaking above 4%. Strong activity at the start of the year and a surprise jump in core inflation now means that 25bp rate hikes at the March, May and June FOMC meetings are the minimum expectations from the Federal Reserve. In fact, markets are pricing a 25% chance that the Fed moves by 50bp at the March FOMC meeting. There are two events to watch next week that will have an important bearing on the near-term outlook for monetary policy. Firstly, Federal Reserve Chair Jerome Powell will be appearing before Congress to present the central bank’s Semi-Annual Monetary Policy Report. His testimony will be closely followed for hints as to whether he thinks there should be a re-acceleration in the Fed’s policy tightening or whether having hiked rates so far and so fast that the more modest 25bp incremental moves remain the most sensible course of action to take. He will be appearing before the Senate on Tuesday and the House of Representatives on Wednesday. After that, all eyes will be on the February jobs report after the blowout 517,000 jump in January payrolls caught everyone by surprise. It was 200,000 higher than even the most optimistic forecasts out there and didn’t tally with any of the business surveys such as the ISMs, the ADP jobs report or numbers from the National Federation of Independent Businesses. On a non-seasonally adjusted basis, payrolls actually fell 2.5mn, which wasn’t far away from the 2.6mn drop in 2021 and 2.8mn drop in 2022. It is therefore likely that labour hoarding in the form of reduced seasonal layoffs post the holiday season was responsible for the strength while 'generous' seasonal adjustment factors appear to have provided an additional boost to generate the seasonally adjusted 517,000 gain. Significantly, the fact that full-time employment has flat-lined since March 2022, meaning all the job creation has been in part-time positions, was largely overlooked. We have pencilled in a 200,000 jobs gain for February but we have next to no confidence. Any random guess between -500k and +500k would be just as valid as our own guestimate. Business surveys of employment remain soft and job loss announcements are up 440% year-on-year and there is a high chance of revisions to January’s 517,000 jump. Given that pretty much anything could happen in this report, the likelihood of significant market volatility in the hours and potentially days around the jobs report is high. Read next: NAGA analyst on Eurozone inflation: This is likely to trigger a more restrictive monetary policy from the ECB for two reasons | FXMAG.COM Canada: Bank of Canada to keep rates on hold We have much more confidence that the Bank of Canada will leave policy rates unchanged next week. At the 25 January BoC policy meeting, the governing council stated that it expects to “hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases” at upcoming meetings. The data since then has shown inflation undershooting expectations and GDP growth stalling, yet the economy continuing to create jobs. We will get an update on Canadian jobs at the end of the week and we wouldn’t be surprised to see a correction lower given the volatility in the series. Read our full preview here. UK: GDP still set for first quarter decline, despite likely January rebound UK economic output fell sharply in December, and probably only partially rebounded in January. Admittedly, these monthly GDP figures have been hard to read, owing to distortions surrounding both the Queen’s funeral last September and then the World Cup (which threw around consumer services activity). That December plunge, however, means that the economy is likely to register an overall first-quarter GDP decline (our current forecast is for a 0.2% fall). The underlying trend in the economy appears to be one of very gradual contraction, thanks in part to an ongoing downtrend in retail spending. We’re expecting a technical recession in the UK in the first half of this year, albeit one that’s not much to write home about. The fall in wholesale gas prices should help consumer bills fall by the summer, which should limit further damage to consumer spending. Key events in developed markets next week Source: Refinitiv, ING TagsUS United Kingdom Canada Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

US market rates fell after the Federal Reserve decision but this looks more like a market positioning effect than anything specific from the meeting. Expect some retracement. Both the European Central Bank and Bank of England are likely to hike by 50bp today, but the undertones could be quite different Net stand-alone outcome from the Fed meeting is an excuse for market rates to push higher The initial impact was upwards pressure on rates – mostly at the front end – and mostly in the real rates space. This fitted with the market's reading that the Fed is not impressed enough yet with the reduction in inflation risks. But that was quickly reversed, and we doubt that the reversal will be sustained. We probably need to see the payrolls report (Friday) before we get the next big move. In the meantime, the market now knows that a March hike is on. That keeps the rate hiking pressure in the mindset over the rest of the first quarter. Whether or not the Fed's view stands at the May meeting won't be known until then, which means the hawkish tilt should be sustained at least till then. A March hike is on. That keeps the rate hiking pressure in the mindset While “over-hiking” can be good for the long end, this is also a higher carry cost associated with higher front-end rates, and that’s a bond negative in a static market. In other words, if you are long bonds and yields don’t fall, you’re in a negative mark-to-market position. That’s a partial argument for further compensatory upward pressure on market rates. The other argument comes from the shape of the curve, which remains remarkably inverted. In fact, it’s unprecedented (at least in the past four decades) for long-tenor market rates to be this far below the Fed funds rate, specifically while the Fed is still hiking. The other key Fed rates have also been raised by the same amount, the full 25bp. That goes for the reverse repo facility (4.55%), the permanent repo facility (4.75%) and the rate on excess reserves (4.65%). This is all broadly as expected. And no special mention about the bond roll-off, which continues as was. There was no reference to outright bond selling either, but hard to believe this is not ever discussed; it’s just that it tends not to make the Fed minutes. US curve inversion means negative carry for holders of long-end bonds Source: Refinitiv, ING ECB meeting: a 50bp hike and guidance for more plus QT parameters While headline inflation coming down is encouraging, the ECB has expressed a focus on core inflation as a measure for underlying price pressures. That remains stubbornly high, implying the ECB is not done with its job yet. Obviously, markets are thinking beyond the next meeting(s) and have already started to price in rate cuts for 2024. ECB officials have pushed back against this notion ahead of today’s policy decision, but with modest success. By the end of 2024, the market still sees the ECB bringing down rates by 90bp from their prospective peak this year. What we will be watching today in brief (full preview here): 50bp rate hike: Markets are firmly priced for a hike of the depo rate to 2.5% today, which is also our expectation.  Rates guidance: The ECB decides on a meeting-by-meeting basis, but still provides a perspective for rates given prevailing conditions. This guidance should be the main focus today. In December the ECB signalled “rates will still have to rise significantly at a steady pace”, with President Christine Lagarde specifying in the press conference that one should expect rate increases “at a 50bp pace for a period of time”. The market largely agrees with our view of another 50bp in March, pricing in 94bp in total by then. Thereafter the pace slows, with a total of 153bp delivered by the July meeting, i.e. depo rate peaking at 3.5%.    Quantitative tightening parameters: President Lagarde promised “detailed parameters for reducing APP holdings”. We would expect the ECB to follow a proportionate reduction across the different asset portfolios, and – with regards to the public sector – sticking with the capital key split across jurisdictions. The ECB may think of shifting exposure towards supranational issuers in the context of “greening” the portfolio.   The ECB has no reason to dial down its hawkishness We think that the ECB has no reason to dial down its hawkishness. Market rates are correctly set for the next few meetings, but we think the notion of rate cuts starting in 2024 could receive more pushback given the ECB's awareness that financial conditions are not just dictated by setting their key rate, but by rates along the entire curve. The risk is that any signs of dissent – which have been notably absent from official communication, but surfaced in a “sources” story – could erode the impact of the ECB’s guidance on rates. That dissent may only show over the next couple of days, though.   Read next: USD/JPY Pair Drop Below 130.00, GBP/USD Is Trading Below 1.2330, The Australian Dollar Remains Generally Up| FXMAG.COM BoE meeting: 50bp hike with a dovish feel Our economists note that while the minutes of the December meeting appeared to open the door to a potential downshift to a 25bp move today, the reality is that the recent data has looked hawkish. Wage growth is still persistently high, and especially services inflation has come in above expectations. What we are watching in brief (for a full preview here): 50bp hike: We expect 50bp hike today, but we think the decision is a closer call than market pricing of 45bp suggests. Vote split: Our economist base case is that six of the nine policymakers will vote for a 50bp hike, one for 25bp and two for no change. New forecasts: The growth outlook looks likely to be upgraded given calmer markets and scaled-back rate hike expectations since the mini-Budget crisis. For the medium-term story, one should keep an eye on the so-called ‘constant rate’ inflation forecasts. If these show inflation at, or very close to, 2% in a couple of years' time it would signal that the Bank Rate is close to its peak. Guidance: The BoE is more likely to keep its options open. Our economist expects the Bank to reiterate being prepared to act ‘forcefully’ in future if required, but shy away from signalling a slowing of the pace in March. Markets still have a relatively hawkish take on the BoE Markets have come around to our more benign view on the terminal rate in this cycle, now implying hikes will stop around 4.25%. Though relative to what we see in other currencies, markets still have a relatively hawkish take on the BoE further out the curve, pricing more elevated rates for longer. Even if the BoE hikes 50bp today, that persistence could be challenged given the overall relatively dovish spin we expect surrounding the hike, for example in the voting split or new forecast, but also given the more general dissent voiced by some BoE officials thus far. We expect more convergence of sterling and euro swap rates after today's central bank meetings Source: Refinitiv, ING Today's events and market view The main highlights today are the ECB and BoE policy decisions. And while both central banks are expected to hike by 50bp, the undertones could be quite different. The ECB should continue to push a concerted hawkish line, while at the BoE we should see more signals of the peak in rates being close. We expect more convergence between EUR and Sterling rates, especially in the 5Y area pertaining more to the medium-term outlook. With regards to eurozone sovereign spreads we think the risks are still tilted towards wider spreads as the impact of quantitative tightening and potential shifts today are underappreciated. Among the data releases, we will see the US initial jobless claims, though they are outweighed by tomorrow's jobs data for January. In the supply space, we will get bond auctions in Spain and France.  Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

Persistently high wage and service-sector price inflation points to another 50bp rate hike from the Bank of England next Thursday. If we're right, then we expect one final 25bp rate hike in March, marking the top of this tightening cycle Governor of the Bank of England, Andrew Bailey Four scenarios for the Bank of England meeting Market pricing based on spot values on 27 January Source: ING   The Bank of England looks more likely to follow the European Central Bank than the Federal Reserve next Thursday, and we expect a 50 basis point rate hike for the second consecutive meeting. While the minutes of the December meeting appeared to open the door to a potential downshift to a 25bp move in February – and this meeting looks like a closer call than markets are pricing – the reality is that the recent data has looked relatively hawkish. Wage growth is persistently high, looking both at the official numbers and the BoE’s own business surveys. Headline inflation came in a little lower than the Bank projected back in November, but services CPI – seen as a better gauge of domestically-driven inflation – has come in above expectations. Still, if we get a 50bp hike on Thursday then it’s likely to be the last. BoE officials have hinted previously that much of the impact of last year’s rate hikes is yet to hit, and cracks are forming in interest-rate-sensitive parts of the economy. Headline inflation should begin to come down more rapidly from March too, as the impact of last year's energy bill surges drop out, and core goods/food pressure begins to ease more noticeably.  We expect one final 25bp hike in March, taking the Bank Rate to a peak of 4.25%. The key question for Thursday is whether the Bank itself acknowledges its work is nearly complete. We suspect it’s more likely to keep its options open. Here's what we expect: 1 The vote split December’s meeting saw the number of policymakers voting for a 75bp hike drop from seven to one, and the committee’s two most dovish officials opted for no rate hike at all. The lesson then and throughout 2022 was that the committee tends to move by consensus, and that means that the vote split is unlikely to be particularly narrow, even if the meeting is a tough one to call. Either we’ll get a similar number of officials voting for 50bp again, or we’ll see the vast majority scale back their vote to 25bp, akin to the kind of shift we saw in December. Our base case is that we see six of the nine policymakers voting for a 50bp hike, one for 25bp and two for no change. How each official has voted on interest rate decisions since 2021 Dr Swati Dhingra joined the committee in August 2022 and began voting in September Source: Bank of England, ING 2 New forecasts Calmer markets and scaled-back rate hike expectations since the mini-Budget crisis last year mean we shouldn’t be surprised to see the Bank upgrade its growth forecasts. Lower gas prices should theoretically help too, though this is a little more awkward for the BoE given that the government hasn’t yet cancelled plans to increase household bills in April, even if such a move now looks unlikely. That also means we’ll have to take the new inflation forecasts with a slight pinch of salt, and our own view is that headline CPI will end the year 1pp lower if April's planned increase is scrapped and consumer bills return to levels consistent with market pricing from the third quarter.  Still, it's the medium-term story that matters more. Keep an eye on the so-called ‘constant rate’ inflation forecasts, where the Bank assumes the Bank rate will remain unchanged from now on. If these show inflation at, or very close to, 2% in a couple of years' time, then that would be a sure-fire sign that policymakers think we’re close to the peak for Bank Rate. 3 Guidance on future policy decisions Governor Andrew Bailey hinted recently that current market pricing, which sees a peak for Bank Rate at 4.4%, is in the right ballpark. That suggests little reason for the Bank to rock the boat too much on Thursday with new forward guidance, and we suspect it will want to keep options open. The Bank will likely repeat that it’s prepared to act ‘forcefully’ in future if required (though we learnt in December’s minutes that 50bp hikes classify as ‘forceful’). We also doubt Bailey will be willing to be drawn on whether the Bank could pivot back to a 25bp hike in March, nor indeed whether that would be the last move in the cycle. Where he may be tempted to push back is on policy easing, especially now markets are almost pricing in one 25bp rate cut by the end of this year. Chief Economist Huw Pill’s recent emphasis on the UK sharing the worst bits of the US and eurozone’s inflation problems – structural labour shortages with the former, the energy crisis with the latter – feels like a line we’ll hear a lot over the coming months as officials try to dampen expectations of policy easing. Sterling rates to tighten to euro, and a more inverted curve The sterling rates curve still trades with a remnant of the risk premium that appeared in the run-up to the September budget debacle, making it one of the few markets where we think rates are unjustifiably high. Things have changed since then, however. Markets have come around to our more benign view on the terminal rate in this cycle, now implying hikes will stop around 4.25%. Instead, the discrepancy is to be found in longer maturities where the curve implies the Bank rate will remain elevated longer than at other central banks. Read next: Ukraine Is Calling For More Sanctions Against Russia| FXMAG.COM What markets expect from the Bank of England over the coming months Source: Refinitiv, ING   That markets taking a more hawkish view of BoE policy than signalled, for instance in its forecast, is nothing new. What’s changed is the way participants look at inflation risk. This has prompted yield curves to take a much more benign view of Fed and ECB policy. Each country is different but we find the treatment of sterling rates increasingly at odds with that of the dollar and euro. As a result, we expect the differential between 5Y sterling and euro swap rates to shrink to 75bp. This convergence should also be helped by the worsening of UK economic surprise indices, just as their eurozone equivalent goes from strength to strength. The spread between euro and sterling swap rates is likely to narrow Source: Refinitiv, ING   We also think the GBP curve is due to flatten further. One likely driver is the market's growing confidence that the BoE, like the Fed, will soon be in a position to cut rates, although we wouldn’t expect this before 2024. Another less probable driver would be if the BoE feels the need to tighten policy more than expected in the coming meetings. We very much doubt that longer rates would follow the short end higher, pricing instead a growing risk of rate cuts down the line to cushion the economic hit. We think the GBP curve is due to flatten further Source: Refinitiv, ING GBP: Temporary strength The BoE’s broad trade-weighted measure of sterling has bounced around 6% since the dark days of September and will marginally ease the BoE’s fears of imported inflation. Given that a 50bp hike is not fully priced for Thursday, sterling could enjoy some limited and temporary strength should the BoE indeed hike 50bp. Depending on the post-FOMC state of the dollar, that could briefly send GBP/USD back into the 1.24/25 range and EUR/GBP back to the low 0.87s. However, the challenges facing sterling have not gone away. Large twin deficits, weak growth and what throughout the year should be building expectations that falling prices – especially from March/April onwards – will provide room for the BoE to cut rates around the turn of the year. In terms of a profile, we think a continued narrowing in GBP rates premium to the EUR can push EUR/GBP higher through the year towards the 0.90/91 area. GBP/USD should be supported by the better EUR/USD trend, but will probably struggle to hold any gains to the high 1.20s – potentially seen in the second quarter. Read this article on THINK TagsInterest rates Bank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

US It will be a busy week filled with the first look at Q4 GDP, corporate earnings, and US debt ceiling gridlock. There is a lot of risk on the table and a key focal point for many will be the modest growth we will see alongside a plethora of data points that are signalling recession warnings. Traders will want to see if the contraction manufacturing and service PMI readings we saw in December show any improvement this month.   Wall Street is also fixating on what will happen with debt ceiling talks. Special measures are being used and that should stave off default until June 5th, but flare-ups will most likely happen along the way.    Earnings season shifts away from the banks and now focuses on broader parts of the economy.  Key earnings include results from Tesla, Chevron, the airlines, Lockheed Martin, Visa, American Express, 3m Abbott Labs, JNJ, GE, IBM, and Colgate-Palmolive.   EU The flash PMIs early in the week will be of keen interest as investors continue to assess how much trouble the economy is in. A relatively mild winter to date has boosted the bloc’s economic prospects as gas prices have fallen considerably. This isn’t expected to be reflected in the PMIs though, with the prospect of much higher interest rates and a tougher global economic environment continuing to weigh. It will be interesting to see if there is any improvement as a result of this and China’s growth prospects. Read next: $1 Million In Sanctions Against Former President Donald Trump, Netflix Co-Founder Reed Hastings Has Stepped Down As CEO| FXMAG.COM Regardless, markets expect the ECB to hike by another 150 basis points over the coming meetings and officials have been keen to ensure investors don’t become complacent on that. I expect more commentary along those lines next week. UK  While the PMIs would typically be the standout release next week, investors may have more of an eye on the PPI inflation data for signs of inflationary pressures subsiding. The CPI data in December declined for a second month but remains far too high, above 10%. We’ll need to see much greater signs of those pressures abating before the Bank of England can become more comfortable. Russia The only economic release of note is the PPI data. That aside, the focus will remain on the war in Ukraine.  South Africa The SARB is expected to raise interest rates by another 50 basis points on Thursday, taking the repo rate to 7.5%, although they could opt for only 25. Inflation has been heading in the right direction since peaking in the summer and could be back within the 3-6% target range before long. Investors will be looking for signs on whether the tightening cycle is now at or near an end.  Turkey The CBRT left the repo rate unchanged at 9% in January after opting to pause the easing cycle late last year. The quarterly inflation report may offer insight into whether rates will fall again and when but that aside, I’m not sure it will contain much of note given the logic adopted to justify cutting interest rates over the last couple of years. Switzerland Trade data is the only notable release next week.  China This Saturday is Chinese New Year’s Eve, followed by the Spring Festival. The New Year atmosphere which generally extends until at least the end of January may further stimulate domestic consumption and investment in China. The billions of trips made during the Chinese New Year could bring the second wave of Covid-19 to largely unaffected rural areas and smaller cities. Given that the general population will have a higher level of immunity, the economic impact of a second outbreak should be less in areas that have already withstood the main wave of evacuations. India No major data or central bank appearances are expected.  Australia & New Zealand China’s full reopening since the beginning of January this year and its renewed focus on ‘economic development’ will benefit economic growth in Australia and New Zealand. The largest potential upside from reopening itself sits within the services sector given China is the largest consumer of Australian tourism and education exports.   Australia recently released its CPI for November at an annual rate of 7.3%, in line with expectations but higher than the previous value of 6.9%, indicating that Australia’s inflation level may still not have peaked.  The RBA’s CPI for December will be released on Thursday, as well as its revised CPI average quarterly rate for the fourth quarter. New Zealand’s CPI for the fourth quarter will offer clues on whether sustainable disinflation is underway.  Japan The Bank of Japan monetary policy decision saw them defer any major decisions until at least Governor Kuroda’s last meeting in March, barring any surprises in the interim. Following that, the summary of opinions on Wednesday could be of interest, as will the December minutes, released Monday. Despite being outdated now, it will provide perspective on the decision to unexpectedly tweak its yield curve control band.   Next week also focuses on the Japan PMI readings, leading index, and Tokyo’s CPI.  Singapore The release of the December inflation will be followed closely.  MAS sees core inflation averaging 3.5%–4.5% this year.  Economic Calendar Saturday, Jan. 21 Economic Events US Treasury Secretary Janet Yellen visits Senegal, Zambia, and South Africa Sunday, Jan. 22 Economic Events Germany Chancellor Scholz and French President Macron hold a joint news conference after a Franco-German cabinet meeting in Paris Italian PM Meloni visits Algiers Monday, Jan. 23 Economic Data/Events US Conference Board leading index Euro area consumer confidence EU foreign ministers meeting in Brussels Russian Foreign Minister Lavrov is expected to travel to South Africa’s Pandor ECB’s Panetta speaks in the European Parliament ECB President Lagarde makes a speech at the Deutsche Boerse annual reception Bank of Japan releases minutes of its December meeting Tuesday, Jan. 24 Economic Data/Events US flash PMIs; Richmond Fed Manufacturing Australia Judo Bank PMI, business confidence Chile PPI European flash PMIs: Eurozone, Germany, UK, and France Japan PMIs, department store sales Mexico international reserves, bi-weekly CPI New Zealand performance services index Thailand trade South Africa leading indicator ECB’s Knot speaks at the Future of the Financial Sector conference in Frankfurt German Foreign Minister Baerbock addresses the Council of Europe in Strasbourg SNB’s Vice Chairman Schlegel speaks in Zurich Earnings from Danaher, General Electric, Intuitive Surgical, Johnson & Johnson, Lockheed Martin, Microsoft, Raytheon Technologies, Texas Instruments, 3M, Union Pacific, and Verizon   Wednesday, Jan. 25 Economic Data/Events US MBA mortgage applications, Philadelphia Fed non-manufacturing activity Australia CPI, leading index Canada rate decision: Expected to raise rates by 25bps to 4.50% Germany IFO business climate Japan leading index Mexico economic activity IGAE   New Zealand CPI, credit card spending Russia PPI, weekly CPI Singapore CPI Thailand rate decision: Expected to raise rates by 25bps to 1.50% The Republican National Committee winter meeting is held Nordic economic outlook published by Finland’s Nordea Bank Germany’s Economy Ministry publishes its annual report with updated forecasts BOJ announces the outright purchase amount of government securities Earnings from Abbott Laboratories, ASML Holding, AT&T, Boeing, IBM, and Tesla Thursday, Jan. 26 Economic Data/Events US Q4 GDP, new home sales, initial jobless claims, goods trade balance, US durable goods, wholesale inventories, retail inventories Canada CFIB business barometer Japan PPI services, machine tool orders Mexico unemployment rate Russia gold, forex reserves Singapore industrial production South Africa rate decision: Expected to raise rates by 50bps to 7.50% New Zealand releases financial statements for the five months to Nov. 30 BOJ releases summary of opinions from January meeting Earnings from American Airlines, Blackstone, Comcast, Intel, LVMH Moet Hennessy Louis Vuitton, Mastercard, SAP, Southwest Airlines, and Visa Friday, Jan. 27 Economic Data/Events US personal income/spending, University of Michigan consumer sentiment, pending home sales Australia PPI, export/import price index Japan Tokyo CPI Mexico trade balance New Zealand business confidence Singapore home prices South Korea business survey Thailand foreign reserves, forward contracts Spain GDP Earnings from American Express, Chevron, and HCA Healthcare Sovereign Rating Updates Denmark (Fitch) Greece (Fitch) Hungary (S&P) Netherlands (Moody’s) Portugal (DBRS) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Week Ahead - Earnings season a highlight - MarketPulseMarketPulse

The New Year starts off with some key data releases. In the eurozone, we expect inflation to drop below 10% due to base effects and declining oil prices. Turkish December inflation is expected to be at 2.9% month-on-month, leading annual CPI to decline even further. In Hungary, we expect a negative reading in November's retail sector performance Eurozone: Energy inflation is set to drop The eurozone starts off the year with some key data releases. Energy inflation is set to trend lower on the back of base effects and declining oil prices. That makes a small drop below 10% quite possible but beware of developments outside of energy. The Economic Sentiment Survey, meanwhile, will give some insight into price expectations from businesses. It will also give a sense of how businesses have fared through the final month of the fourth quarter when we expect a contraction. Turkey: Annual CPI expected to maintain its downward trend We expect December inflation to be at 2.9% MoM, leading to a further decline in the annual figure, to 67% from 84.4% a month ago. Easing global commodity prices and strength in the currency will likely be supportive factors in the monthly reading, and along with favourable base effects, this will contribute to annual CPI continuing its downward trend in the near term, depending on the continuation of currency stability. Read next: EUR/USD Pair Remains Within Its Horizontal Trading Range, The Aussie Failed To Break The Resistance At 0.68| FXMAG.COM Hungary: Negative reading in November retail sector performance In Hungary, the New Year starts with some strong labour market data. Strong wage growth might come from the one-off, mid-year wage adjustment, which is reflected in inflation readings. The unemployment rate will show some short-term stability heading into year-end. But the real deal will be the retail sector performance in November, where we expect a negative reading, showing the impact of negative real wage growth and the changing propensity to consume. Key events in developed markets next week Source: Refinitiv, ING Key events in EMEA next week Source: Refinitiv, ING Key events in Asia next week Source: Refinitiv, ING Read this article on THINK TagsTurkey Hungary Eurozone Emerging Markets EMEA Asia week ahead Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

14 November 2022 Are we there yet? Falling inflation pops up risk assets GBPUSD awaits budget catalystThe pound edges higher as Britain may look to restore markets’ confidence with a new budget. Sterling has recouped losses from the September budget firesale. Traders are awaiting a new announcement while riding on the dollar’s softness. Heightened volatility could be expected this week as British finance minister Jeremy Hunt presents his plan to fill a £50 billion fiscal hole. After the market sanctioned Mr Kwarteng’s unfunded tax cuts, fiscal discipline with a mix of public spending cuts and tax rises would alleviate worries about Britain’s finances. 1.2300 is the next hurdle as the recovery goes on. 1.1150 is the closest support. USDJPY tumbles on lower inflationThe Japanese yen soared over the prospect of a narrowing interest differential with the US counterpart. Following months of parabolic ride, a weaker US CPI finally gave traders an excuse to exit an overcrowded trade. The market has been watching Japan's falling foreign reserves and pondering whether Tokyo would commit more of its war chest to prop up its currency. But now a greater fall than the one from Japanese authorities’ intervention indicates that prolonged weakness has released the reversal tension, making the yen the main beneficiary of the dollar’s retreat. 137.00 is the first support and 144.00 a fresh resistance. UKOIL struggles as China’s demand worriesOil markets cheered after China announced an easing of some of its COVID curbs. Brent crude has been going sideways over demand concerns. China’s zero-COVID policy and a resurgence in infections in major cities remain a thorny problem. Now that the manufacturing centre of Guangzhou has become ground zero, expectations of a slowdown in China’s activities and its appetite for the commodity put the buy side on the defensive. Meanwhile, global supply has kept up with US crude stocks surprisingly rising to a 16-month high. The supply demand imbalance may cap the price under 105.00. 84.00 is a key support to monitor. NAS 100 recovers on renewed Fed pivot hopesThe Nasdaq 100 bounced back as hopes of peaking inflation took a foothold. With US CPI coming in below 8% for the first time in eight months, investors have regained faith in a policy U-turn by the Fed sooner than later. Plunging Treasury yields suggests that the central bank could live with a 50bp rate hike in December, rather than a 75bp one. However, the bounce could be opportunistic as it might take multiple sets of data over the next few months to make the Fed change its mind. The pivot may only happen when there is a consistent deceleration in inflation. The index is heading towards 12800 with 10500 as a fresh support. Key data release (GMT time) Monday, 14 November BoE Monetary Policy Report Hearings 23:50 Gross Domestic Product Tuesday, 15 November 00:30 RBA Meeting Minutes 07:00 ILO Unemployment Rate 10:00 Gross Domestic Product       Wednesday, 16 November 07:00 Consumer Price Index 13:30 Retail Sales BoC Consumer Price Index Core Thursday, 17 November 00:30 Unemployment Rate