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On February 21, Paul Ashworth, chief economist for North America at Capital Economics, stated that the Trump administration has several other ways to implement trade barriers, potentially resorting to Section 122 of the Trade Act of 1974 or invoking Section 338 of the original Smoot-Hawley Tariff Act of 1930. Regarding refunds, Ashworth estimated the amount would reach approximately $120 billion, representing 0.5% of GDP. Justice Brett Kavanaugh, who wrote the main dissenting opinion on the ruling, noted that "this process is likely to be a chaotic affair, as acknowledged in the oral arguments."February 21st - Ian Lingen, Head of U.S. Interest Rate Strategy at BMO Capital Markets, stated that market participants largely anticipated the Supreme Courts ruling, so the limited reaction in the U.S. interest rate market was not surprising. James Assy, Portfolio Manager at Marshall Investment Management, said the reaction has been quite mild so far. The market is unsure what to do. The real big question would have been any talk of refunds. I think this news is slightly bearish for U.S. Treasuries. This is a short-term negative for the budget, so it should be bad for Treasuries. But its really hard to see how this will actually work – its very complex.The German DAX 30 index closed up 231.37 points, or 0.92%, at 25249.35 on Friday, February 20th; the UK FTSE 100 index closed up 63.16 points, or 0.59%, at 10690.20 on Friday, February 20th; and the French CAC 40 index closed up 116.71 points, or 1.39%, at 8515.49 on Friday, February 20th; the Euro... The Stoxx 50 index closed up 70.58 points, or 1.16%, at 6130.20 on Friday, February 20; the Spanish IBEX 35 index closed up 162.72 points, or 0.90%, at 18180.22 on Friday, February 20; and the Italian FTSE MIB index closed up 675.28 points, or 1.47%, at 46469.50 on Friday, February 20.The Federation of German Industries (BDI) stated (regarding the US Supreme Courts tariff ruling) that, with Berlins support, the EU should promptly engage with the US to clarify the impact of the current ruling on the EU-US trade agreement.The World Trade Organization declined to comment on the U.S. Tariff Courts ruling.

Changes at 0.8760 can be seen in the EUR/GBP pair as traders await BOE policy announcements

Daniel Rogers

Sep 21, 2022 14:49

截屏2022-09-21 上午10.11.18.png

 

The Euro to Pound exchange rate has been volatile recently, moving between a range of 0.8758 and 0.8767 as traders await the Bank of England's interest rate decision (BOE). In the past, after dropping to around 0.8724, the asset staged a strong recovery. Asst will go up as it breaks through the 0.8787 key level. It looks that the bold purchase was a reaction to something.

 

One factor that could cause a significant shift in the cross is the Bank of England's monetary policy. Surprisingly, inflationary pressures in the UK fell in August after staying above 10% for the previous month, despite rising energy prices for households. The BOE does not need to change course in light of the August drop in inflation. Despite the absence of support from economic prospects and the job market, the BOE must declare a painful 50 basis point (bps) interest rate increase.

 

Given that salary data is insufficient to counteract the forced inflation of household payouts, the BOE could not tolerate the higher price rise index becoming ingrained in economic behavior.

 

Meanwhile, efforts are being made to help the Eurozone economy recover from the growing energy crisis. It is winter in Germany, so the government has decided to save the natural gas importer Uniper.

 

While Russian leader Vladimir Putin has declared that gas supplies to Europe will begin if the trading bloc eliminates sanctions on the Nord Stream pipeline 2, the restrictions remain in place. Germany must ensure there are enough gas reserves to fulfill the higher demand in the winter. Western sanctions against Russia are not expected to be lifted anytime soon.

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