Daily market report 21/12/22

The calm before Christmas

Thanim Islam
Thanim Islam 21 December 2022

- Japan yen biggest gainer 

- Canada inflation focus today

- Markets in state of calm 

Yesterday 

  • The JPY was the biggest mover of the day, accelerating its gains across the board with GBPJPY now at the lowest since September. The move came after the Bank of Japan indicated that it is shifting its stance on monetary policy, and joining others in being hawkish.
  • Antipodean currencies AUD and NZD were the biggest losers of the day.
  • Canadian retail sales came in higher than expected to 1.4% versus an expected fall of 0.3%, adding to CAD gains, and causing GBPCAD to drop off March highs.
  • US housing data came in mixed, with building permits coming in lower and housing starts higher than expected, but with minimal impact on USD.

Today 

Market rates 

* Daily move - against G10 rates at 17:00pm, 20.12.22

** Indicative rates - interbank rates at 17:00pm, 20.12.22

market rates 21/12/22

Data points 

Data points 21/12/22

Speeches 

  • None today 

Our thoughts 

Following the buzz of the JPY moves yesterday, this morning there seems to be a sense of calm in markets with the only notable move overnight being continued weakness in NZD. However, it's worth noting that GBPNZD is still well within the ranges seen over the last month.

The only thing to look out for today is Canada’s inflation. We saw a peak in inflation in June, above 8%, but since we have seen prices ease off to 6.9% in October. As we have seen recently, global inflation does seem to be easing off, so no surprise to see markets are expecting this print to come in slightly weaker as well.

Chart of the day 

The hawkish BoJ comments yesterday caused money markets to increase their bets on peak interest rates in Japan for next year. Not to same magnitude as other nations, but nonetheless markets are betting on higher interest rates for a country that has kept its target rate at -0.1% since 2016.

chart of the day 21/12/22

Source: Bloomberg FInance L.P.

Have a great day.