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Japanese Economy and Fiscal Policy Minister Minoru Shirou: The economy may be supported by employment, improved wage conditions, and government policy measures.Japanese Economy and Fiscal Policy Minister Minoru Shirou: The Japanese economy continues its moderate recovery.Futures Commentary by Everbright Futures: With multiple US inflation data points showing signs of cooling and consumption weakening, the market lowered its expectations for a September rate hike, causing gold prices to retreat after an initial surge last week. Short-term resistance for gold is evident, but stagflation, geopolitical risks, and central bank gold purchases provide support, limiting the potential for a significant pullback. Following the unexpectedly weak US non-farm payrolls data in July, both CPI and PPI figures confirmed a marginal easing of inflationary pressures. The markets extreme pricing of a September rate hike has significantly decreased from previous highs, driving a substantial rebound in gold prices. However, as the data was released, the probability of a rate hike decreased, and the market became uncertain again, leading to profit-taking and a slight decline in gold prices. Furthermore, according to Bloomberg, the Japanese government supports a near-term rate hike by the Bank of Japan, with the next rate hike likely occurring in September or October, causing a brief liquidity panic in the market. In the short term, gold prices face significant resistance in the upper range and require time to digest the situation and further catalysts from news events. However, it is foreseeable that with the deepening of stagflation in the United States, persistent geopolitical risks, and continuous increases in holdings by the domestic central bank, all of these factors will provide structural support for gold, and the probability of a significant correction remains low.On August 17, the foreign ministers of eight countries—Egypt, Qatar, Jordan, the United Arab Emirates, Indonesia, Pakistan, Turkey, and Saudi Arabia—issued a joint statement on August 16, strongly condemning Israels recent rejection of the Gaza peace plan. The statement said the plan, accepted by all Palestinian factions, is a significant achievement resulting from extensive efforts by mediators. Israels public refusal to implement the Gaza peace plan is a direct denial of it and fundamentally undermines collective efforts towards a just and lasting peace. The statement also pointed out that Israel bears direct and full responsibility for all the consequences, including the deterioration of the situation and the obstruction of the Gaza peace process. The eight foreign ministers stated in the statement that the United States should continue to actively participate in the implementation of the Gaza peace plan to ensure Israels full compliance with the plan and fulfillment of its commitments, and to prevent further obstruction of its implementation.On August 17th, sources close to the deal revealed that Zhou Bingshu, CEO of Lingxi Interactive Entertainment, confirmed in an internal letter that Alibaba Group and CITIC Capitals Xinchen Capital have officially reached a transaction agreement. According to the agreement, Alibaba will transfer its shares in Lingxi Interactive Entertainment, and Xinchen Capital will become the new shareholder. Previously, reports indicated that CITIC Capitals Xinchen Capital would acquire Alibabas Lingxi Interactive Entertainment for over US$1.5 billion (over RMB 10.1 billion).

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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