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A few flashes to get things done

Fed Chairman Powell provided the latest curve to the market yesterday as he called for the “transient” inflation narrative to be withdrawn, paving the way for a faster pace of reduction.

In the run-up to that, markets gradually phased out the Fed’s mid-year rate hikes amid omicron fears, but Powell’s remarks warrant an overhaul.

The science behind the omicron variant may not yet be fully understood and uncertainty keeps markets on their toes, but so far the data doesn’t hint at anything too drastic and the point of Powell’s view suggests that there will be no setback for the United States at least.

The dollar surged higher only to give up most of its lead on Powell’s remarks, with the Aussie and Kiwi notably holding daily close above key tech support levels before rebounding further today then that risky transactions are doing better.

Oil was a big loser yesterday, but is rebounding slightly over 2% to $ 67.80 as buyers look to hunt for bargains. Note Goldman Sachs’ take on oil here.

Looking ahead, risk sentiment will continue to be a key driver of trade sentiment, but also watch out for dollar games after Powell’s surprise yesterday.

0700 GMT – UK November House prices nationwide

The previous version can be found here. Growth in UK house prices is expected to continue through the end of the year, highlighting strong demand despite the stamp duty holiday expiring in September and even with a gradual increase in prices.

0700 GMT – Germany October Retail Sales

The previous version can be found here. After the September stutter, German retail sales are expected to improve slightly in October, but mounting cost pressures will not make things easier in the coming months as higher prices trickle down to consumers.

07:30 GMT – CPI figures for November Switzerland

The previous version can be found here. Swiss inflation is estimated to be climbing a bit higher but still well below 2%, so there aren’t many price overshoot fears for the SNB relative to the rest of the world at the moment.

0815 GMT – Spain November Manufacturing PMI

08:30 GMT – Switzerland November manufacturing PMI

0845 GMT – Italy November Manufacturing PMI

0850 GMT – France November Final manufacturing PMI

0855 GMT – Germany November Final manufacturing PMI

0900 GMT – Euro zone final November manufacturing PMI

Even though manufacturing output held steady in November, general conditions are still largely hampered by disruptions in the supply chain for most. Soaring cost pressures will only add to worries about the outlook, and new concerns related to COVID-19 will certainly not help calm the mood as the end of the year approaches.

0930 GMT – Final November UK Manufacturing PMI

The preview version can be found here. Manufacturing output rebounded slightly in November, so today’s final reading may reaffirm that, but also highlight issues with supply bottlenecks – something of a mainstay in the region – which will probably persist for the next few months, adding to the escalating pressure on prices.

1200 GMT – US MBA Mortgage Applications Nov 26

The US Weekly Housing Data measures how the number of applications for MBA-backed mortgages has changed over the week.


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