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The US Treasury auction for the six weeks ending August 25th yielded a winning bid of 3.65%, unchanged from the previous week.August 25th - According to Iranian sources on the 25th local time, a source close to the Iranian negotiating team stated that Iran hopes to clearly convey its position and negotiating conditions regarding the Strait of Hormuz to the United States through Pakistan. The source said that during a meeting with visiting Pakistani Army Chief of Staff Mohammad Munir on the 24th, Iran clearly explained its position to Pakistan. Irans conditions include the United States complying with the Islamabad Memorandum of Understanding and fulfilling its relevant provisions, with Article 5 concerning Irans arrangements for the management of the Strait of Hormuz. The source indicated that Pakistan is seeking to convey these conditions to the United States.August 25th - Honda Motor Co. is considering building a new plant in the United States. As the company plans to expand its lineup of gasoline-electric hybrid vehicles starting in 2030, a senior executive at the Japanese automaker stated that the company needs to further increase production capacity. This plan comes after Honda made a broader strategic shift earlier this year, when it canceled plans to launch three all-electric models for the U.S. market. Honda plans to launch 15 new hybrid models by March 2030, primarily targeting the North American market. A Honda executive vice president stated, "To meet customer demand, we do need to increase production capacity. The next production plant should be located in North America."On August 25th, Federal Reserve Chair Janet Collins stated that she currently supports maintaining interest rates, but this stance depends on seeing further progress in inflation declining and gradually moving towards the Feds 2% target. Collins wrote, "To maintain the current target range for the interest rate, we need to continue to see evidence that inflation is indeed declining. If this evidence of a sustained decline in inflation does not emerge, I think monetary policy should be tightened as soon as possible." She stated that recent inflation data showed underlying price pressures were moderate, which was "somewhat encouraging," but added that monthly data could be volatile. "Whether the recent improvements can be sustained remains to be seen." Collins said that tighter interest rates, coupled with rising long-term yields, should alleviate some of the inflationary pressures from strong household and business consumption. She added that the impact of previous tariffs is expected to have largely subsided, and the impact of rising oil prices on inflation should also begin to weaken.Canadian Finance Minister: U.S. tariffs will have a real impact on Canada, and we must respond.

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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