EM Market Report

China narrative continues to dictate market

Thanim Islam
Thanim Islam 22 November 2022

- USD and CHF gain on weaker risk appetite

- Fed's Daly and Mester push for slower hikes

- ECB Holzmann still backs 0.75% rate hikes


As we can see below, market moves on GBP crosses were minimal to say the least, with the China Covid-19 story being the main driver, causing AUD to be weaker, and a stronger USD and CHF on safe haven flows.

GBPEUR attempted to push through the overnight highs but failed to follow through despite producer price inflation in Germany coming in a lot lower than expected.

ECB Governing Council member Holzmann supported the idea of a 0.75% rate hike in December’s meeting if inflation stays the same, and would only vote for a 0.50% hike if there was a major reduction in prices.

Fleeing to safety was the name of the game with USD gaining across the board yesterday.

GBP vs G10

Against rates at 17:00pm, 21.11.22.

Currency pairs

Daily move (%)






















Market rates

Today's interbank rates at 08:44am against sterling rates yesterday.


€1.152 -

US dollar


Australian dollar


South African rand


Japanese yen


Data points

CAD Retail Sales MoM - Sept

Consensus: -0.70%

Previous: 0.70%

EUR Consumer Confidence - Nov

Consensus: -0.26

Previous: -0.276

AUD S&P Manufacturing PMI - Nov

Consensus: 52.4

Previous: 52.7

AUD S&P Services PMI - Nov

Consensus: 49.1

Previous: 49.3


  • EUR: ECB’s Holzmann, Rehn, and Nagel

  • USD: Fed’s Mester, George, and Bullard

Our thoughts

Overnight we saw Fed members Daly and Mester caution about the Fed’s current pace of hiking rates, causing USD to lose some of the gains from yesterday. But with China’s daily Covid-19 infections climbing to near the highest on record, markets will likely continue to be dictated by the narrative from China, with equity futures all pointing to a lower start.

So, likelihood is we’ll see some of the gains from recent weeks unwind slightly, as markets continue to take stock of the optimism over China reopening.

Chart of the day

Demand for the dollar has been the port of call over the last week as optimism over China pivoting from it's zero-Covid policy softens.

It is a shorter week with the US closed for Thanksgiving, and in the face of a bit of uncertainty, flows into the safety of the US dollar could well continue this week.

22112022 cotdSource: Bloomberg Finance L.P.

Have a great day.