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No Aussie Inflation Problem

No Aussie Inflation Problem

UK PMI manufacturing figures were revised slightly higher for October but supply problems continued to impact. There was further speculation that the Bank of England would raise interest rates this Thursday but the Pound failed to make any headway, especially with expectations that the bank rhetoric would also not support current market expectations and current market prices. Sterling held above 1.3650 to the dollar and improved as the day progressed while the Euro pushed close to 1.1800. 

In Europe and the US data releases printed slightly worse than forecast, and there was caution ahead of Wednesday’s Federal Reserve policy decision. Strong expectations remain that the central bank would announce a tapering of bond purchases but state that conditions for an interest rate hike had not been met, yet. 

Reserve Bank of Australia (RBA) Governor Phillip Lowe – we Don’t have an inflation problem in Australia, the market’s assumption of interest rate hikes in early 2022 is well away from where we are now. AUD has depreciated following the announcement, falling c.0.7%

On the fishing row French President Macron said France ‘won’t be bringing in sanctions while we’re negotiating’ with the UK. The next presidential elections are in April next year.

This morning the Pound opens close to 1.3650 to the dollar while the Euro had strengthened  to 1.1765.

 

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