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Recession seems inevitable as stubbornly high inflation plus the escalation of the war forced policymakers’ hands. Stocks fell, while US government bond yields soared to fresh multi-year highs.
Major central banks announced monetary policy decisions following the US Fed’s meeting for September with the Bank of Japan firstly, on Thursday, deciding to keep its monetary policy on hold. However, not long after the meeting, the BOJ intervened in the Forex market.
Economic Data
There were 213,000 initial jobless claims in the week ending September 17, the weekly data published by the US Department of Labor (DOL) showed on Thursday. This print followed the previous week’s print of 208,000 (revised from 213,000) and came in better than the market expectation of 218,000.
Consumer confidence in the eurozone retreated to record low in September amid accelerating concerns about increased costs of living and slowdown of the EU economy.
The European Commission said Thursday that its measure of consumer confidence in the region fell by 3.8 points in September from the August reading. Consensus had expected a fall to -25.8. In the European Union as a whole, consumer sentiment fell by 3.5 points to -29.9.
Other Developments
On Thursday, Moscow repeated threats to the western world with a nuclear war amid the latter help to Ukraine.
The Switzerland National bank hiked its benchmark rate by 75 bps. However, USD/CHF advanced, ending the day in the 0.9780 price zone. Governor Thomas Jordan said they are ready to intervene to steer monetary conditions for the Swiss Franc.
The Bank of England decided a 50 bps rate hike, disappointing investors. Governor Andrew Bailey noted they would continue responding “forcefully, as necessary” to inflation, despite the risk of a steeper economic setback.
BoE policymaker Jonathan Haskel said the central bank encountered difficulty as the government’s expansionary fiscal policy appeared to place it at odds with the BoE’s efforts to cool inflation.
As a note of a different colour, it is worth noting that the Turkish Central Bank decided to cut rates from 13% to 12%.
The EUR/USD pair trades around 0.9830, meeting intraday sellers at around 0.9900. The AUD/USD pair posted a modest intraday advance and hovers around 0.6640/50, while USD/CAD trades at 1.3480.
The USD/JPY pair fell from an intraday high post-meeting of 145.89 to 140.34. It currently trades at 142.43 at the time of writing.
Gold posted a modest intraday advance and settled at $1,672 a troy ounce. Crude oil prices finished the day pretty much unchanged, with WTI now trades at $83.50 per barrel.
On Friday, S&P Global will release the flash estimates of the September PMIs for major economies.
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