Currency Note

G20 finance ministers and central bankers will meet this afternoon

By Christopher Nye February 22nd, 2023

The G20 2023 summit, attended by finance ministers and central bankers, will be held in India today.

Today is an interesting day for market-watchers as G20 members will meet to discuss several challenges to global economic growth. This will also include members from G7 nations the UK, Canada, the US, Italy, France, Germany and Japan.

Additionally, we will hear two speeches from BoE members today. Deputy governor Jon Cunliffe and monetary policy committee member, Catherine Mann, who will both speak on inflation today. Economists will be listening closely for any hawkish comments which could further strengthen sterling against its rivals.

France is facing its driest winter in over six decades as a month of no significant rainfall puts the country in a state of alert.

It is a similar story for French stocks as the CAC 40 index closed at 7,299, marginally down on Wednesday. This marked the fourth consecutive session of losses, in line with its European peers.

Likewise, European equity markets closed in the red yesterday, with the benchmark Stoxx 600 down around 0.4%. This was largely due to downbeat earnings reports which dragged down mining stocks and banks while media stocks rose.

US job markets can expect the latest unemployment claims data which will be released at 1:30pm today along with preliminary GDP (quarter-on-quarter). According to the U.S. Department of Labor, the number of Americans filing for unemployment benefits is expected to edge up to 197,000 after declining to 194,000 in the week ending February 11th.

In Asia, The Bank of Japan (BoJ) announced its emergency bond-buying operation. This follows data released on Wednesday which revealed Japan’s 10-year government bond yield breached the top end of the BoJ’s policy band for a second consecutive session.

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GBP: BoE’s Catherine Mann to speak shortly

Sterling maintains this week’s euro gains following better-than-expected PMI data on Monday and investors will be keen to see if this morning’s speech from MPC member Catherine Mann will move the pound.

Mann’s speech is titled, “The results of rising rates: Expectations, lags and the transmission of monetary policy. Her speech be delivered at 9:30 this morning.

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EUR: Germany’s Ifo business climate increases

Markets saw the latest business climate reading from Germany’s Ifo institute yesterday. The monthly release from the institute gives investors clues into the level of a composite index based on surveyed manufacturers, builders, wholesalers, services, and retailers.

Euro-watchers would have kept a keen eye on results as an index equal to or above market expectations usually has a positive impact on the single currency. Yesterday the Ifo reported an increase to 91.1 compared to forecasts of 91.2, signalling less pessimistic expectations.

USD: Preliminary GDP figures at lunchtime

The preliminary quarter-on quarter GDP figures for the US will be released at 1:30pm UK time today. Investors will be watching closely as the data will provide the broadest measure of economic activity in the US as well as a primary gauge of the economy’s health.

If the growth rate figures expand by 2.8% as expected, and compared to last quarter’s jump to 3.2%, this among other factors could potentially weaken the dollar.

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