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July 16 - The Indian government announced adjustments to windfall profits taxes on petroleum products, effective July 16. Specifically, the windfall profits tax on diesel exports will increase from 8.5 rupees per liter to 15.5 rupees per liter, and the export tax on aviation turbine fuel will increase from 7.5 rupees per liter to 14.5 rupees per liter; while the export tax on gasoline will decrease from 4 rupees per liter to 2.5 rupees per liter.July 16th - The Federal Reserves Beige Book showed that overall U.S. price levels rose moderately. Of the 12 Fed districts, 9 reported moderate price increases, 2 reported stronger increases, and 1 reported a smaller increase, with the overall increase remaining flat or slowing compared to the previous period. The report stated that rising energy, transportation, and raw material costs pushed up business input costs, with some businesses attributing the pressure to the Middle East conflict and tariffs. Consumer prices continued to rise, squeezing the profit margins of some businesses. Market opinions are divided regarding future inflation trends; some expect inflation to remain at current levels, while others believe that declining fuel prices may alleviate the pressure.July 16th - The Federal Reserves Beige Book showed that the U.S. job market maintained overall growth. Of the 12 Fed districts, five saw modest, moderate, or significant job growth, while seven remained largely unchanged, an improvement from the previous period where only one district reported job growth. The report stated that employment increased in several sectors, including manufacturing, construction, and retail, but recruiting skilled workers and technicians remained difficult. Job losses occurred in some districts, but the declines were limited. Regarding wages, most districts saw modest to moderate wage growth, with some increases related to companies competing for skilled labor. Furthermore, a few districts saw companies increasingly utilizing artificial intelligence for recruitment screening or to improve employee productivity.July 16th - The Federal Reserves Beige Book showed that U.S. economic activity grew slightly to moderately in 11 of the 12 Fed districts during the period from the end of May to June, with the overall growth rate roughly the same as the previous period. The report stated that factors such as high oil prices dampened some consumption, with consumers reducing spending on non-essential items and turning to lower-priced goods. Tourism saw some recovery, with World Cup-related travel providing a boost to some regions. Manufacturing maintained moderate growth, with orders increasing in data centers, machinery, and defense. Construction and real estate activity improved slightly, with data center construction being a bright spot. In addition, drilling activity in the energy sector increased, financial conditions were generally stable, and commercial and consumer lending rose moderately. However, agriculture was affected by declining commodity prices, rising costs, and tighter credit. Most respondents expected the economy to continue expanding in the coming months, but significant uncertainty remained regarding the outlook for fuel costs.The Federal Reserves Beige Book indicated that respondents generally expect the U.S. economy to continue expanding in the coming months, but several districts noted that the outlook for fuel costs remains highly uncertain.

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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