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On October 29th, US President Trump stated on Wednesday that he expects US GDP to grow by 4% in the next quarter. He also stated that he will not allow the Federal Reserve to raise interest rates. Regarding Trumps remarks, some analysts suggest that Trump should be pleased with recent developments, as the market has accepted the view that the Fed must cut interest rates sooner rather than later. There is no doubt that the central bank must act before the end of the year, although, according to his statement, he may prefer a more significant rate cut.End of October: 1. TD Securities: Advances forecast for the end of the Feds balance sheet reduction to October. 2. Mizuho Securities: Advances forecast for the end of the Feds balance sheet reduction to October. 3. Bank of America: The Fed will announce the end of quantitative tightening at the end of October, not the end of the year. 4. JPMorgan Chase: The Fed will stop shrinking its approximately $6.6 trillion balance sheet this month. 5. Evercore IS: The market has largely reached a consensus that the Fed will end quantitative tightening this month. 6. Nordea Bank: We expect the October meeting will likely result in a decision to completely halt balance sheet reduction, or at least an announcement that a decision is imminent. 7. ANZ: Powell stated that the Feds balance sheet reduction means bank reserves are moving from "ample" to "adequate," so the Fed may consider ending quantitative tightening and may announce in October that the balance sheet reduction will end in December. 8. Economists at Wrightson ICAP: The Fed may announce at its October interest rate decision that it will no longer reduce its bond holdings. The Federal Reserve will begin purchasing U.S. Treasuries to offset maturing mortgage bonds, thereby maintaining a stable balance sheet. Ending in December: 1. Goldman Sachs: We expect the Fed to end its balance sheet reduction program later than October. 2. Barclays: The Fed may signal an end to its balance sheet reduction program in December. 3. Deutsche Bank: We expect the Fed to announce quantitative tightening at the FOMC meeting at the end of December. 4. CityIndex analyst David Scutt: The Fed may also announce the end of quantitative tightening in its statement, but the likelihood is greater that it will be delayed until December. 5. PIMCO Director and former Federal Reserve Vice Chairman Richard Clarida: Even if the Fed does not formally end its balance sheet reduction program in October, we will receive a strong signal that quantitative tightening will end in December.Japans household consumer confidence index was 35.8 in October, down from 35.3 in the previous month.US President Trump: We will reach a great trade deal with India.US President Trump: If I were still president, the Russia-Ukraine conflict would never have happened. We completed eight such missions in eight months, and Im sure the others will be resolved. I thought it was one of the easiest things to do.

In the midst of a Eurogroup meeting, the EUR/JPY crosses 144.40 for the first time in seven years

Alina Haynes

Sep 09, 2022 17:22

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The EUR/JPY pair is on the verge of regaining its seven-year high above 144.30, as positive results from the Eurogroup meeting are expected to support those who like the common currency. The asset is being auctioned close to Thursday's high at 144.29 and is aiming to surpass it as the European Central Bank (ECB)-Bank of Japan (BOJ) policy divergence has grown.

 

Bulls in the eurozone against the Japanese yen were encouraged by the ECB's historic move to raise interest rates by 75 basis points (bps) to 1.25 percent on Thursday. Both increasing price pressures and slow economic development pose a threat to the trading bloc. It is well known that increasing interest rates limit economic opportunities. In the wake of the crisis, Christine Lagarde, the president of the European Central Bank (ECB), opted to give up on growth goals and concentrate on establishing price stability.

 

The ECB stressed during a discussion of interest rate guidance that future rate increases won't be as significant and that the institution will still be reliant on data. Inflation forecasts have also been made public by the central bank, with average rates of 8.1% in 2022, 5.5% in 2023, and 2.3% in 2024 predicted. The European Central Bank (ECB) attributed the escalating pricing pressures to supply chain restrictions, increasing energy and food prices, and other factors.

 

The optimistic Gross Domestic Product (GDP) figures in Tokyo did not significantly help the yen bulls. The 0.9% figure for the Japanese GDP report was higher than both the 0.7% expected as well as the 0.5% figure from the prior release. In addition, compared to forecasts of 2.9% and the prior reading of 2.2%, the yearly statistics dramatically increased to 3.5%.

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