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A Reuters poll of 35 economists showed that 18 of them expect the Bank of Korea to raise its benchmark interest rate to 3.00% on August 27, while the rest believe the rate will remain unchanged at 2.75%.On August 25th, a CICC research report stated that the markets focus this week is the Jackson Hole meeting and Warshs speech. Warshs previous statement that "let the market raise rates for the Fed" failed to alleviate inflation concerns, and coupled with the ineffective intervention of the Treasury Department, policy credibility has been damaged, leading to a continued rise in US Treasury yields. We expect Warsh to reiterate the risks of inflation and retain the option of raising rates to rebuild credibility, but he will also continue to adhere to his long-term propositions of reducing central bank intervention and decreasing the frequency of communication. We believe that Warsh has not abandoned the policy concept of "balance sheet reduction + interest rate cuts," but the premise on which it is based is out of sync with the current reality, requiring coordination and clearer expression. If Warsh can demonstrate sufficient policy flexibility, market concerns about US Treasuries may be partially alleviated, supporting the dollar; conversely, trust will continue to erode, long-term US Treasury yields will continue to rise, and the dollar will be under pressure.The Nikkei 225 index fell by 1.00% during the day.August 25th - According to sources familiar with the matter, Lambda, the AI cloud computing service provider backed by Nvidia (NVDA.O), is in talks for a funding round of up to $3 billion, which could pave the way for its IPO next year. The sources said that Lambda, an "emerging cloud" company that provides chip and other AI infrastructure leasing services, is discussing a funding round at a valuation of up to $12 billion or even higher. They stated that the funding negotiations are still ongoing and the terms of the deal have not yet been finalized. It is understood that Lambda has received multiple investment offers for this round, which, according to company insiders, could pave the way for an initial public offering (IPO) as early as next year. Some sources indicated that the companys revenue this year is expected to exceed $1.5 billion.The Nikkei 225 index opened down 358.16 points, or 0.55%, at 65,169.93 on Tuesday, August 25.

GBP/USD seeks to regain 1.2300 as higher UK CPI strengthens the case for a rate hike by the Bank of England and the USD retreats

Alina Haynes

Mar 23, 2023 15:00

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During the Asian session, the GBP/USD pair attempts to reclaim the resistance level at 1.2300. Following a vertical correction, the Cable has recovered to near 1.2260 as the market anticipates that the absence of hawkish interest rate guidance from Federal Reserve (Fed) chair Jerome Powell while addressing the economy at the monetary policy meeting indicates that the Fed is close to ending its policy-tightening spell.

 

S&P500 futures have generated some gains in the Asian session following a decline on Wednesday as a result of Fed Powell's confirmation that the fight against intractable U.S. inflation will continue. Chairman of the Federal Reserve Jerome Powell has ruled out rate cuts in 2023, citing the difficulty of controlling inflation. In addition, US Treasury Secretary Janet Yellen's statement that the government "does not plan to insure all uninsured bank deposits" heightened fears of a banking sector collapse.

 

Following a recovery move, the US Dollar Index (DXY) has retreated on expectations that additional credit tightening to protect banking institutions will reduce overall demand, economic activity, and inflation. In the interim, the demand for US government bonds has increased as a result of expectations that US Janet Yellen will end further policy restrictions and reduce support for all bank deposits.

 

On the front of the United Kingdom, the Pound Sterling is likely to maintain its strength as the Bank of England (BoE) is scheduled to raise rates for the eleventh consecutive time. Governor Andrew Bailey of the Bank of England is expected to raise interest rates by 25 basis points (bp) in response to rising food and non-alcoholic beverage prices, as well as rising energy costs, which have contributed to inflation in the United Kingdom.

 

In the midst of global banking turmoil, the Bank of England's (BoE) interest rate decision will be difficult, as policymakers were divided over whether to raise rates further or maintain them at their present level.


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