New Inflation Records, This Time In The UK

After two fairly quiet days, Wednesday brings us a quite packed calendar, which has already managed to increase volatility on some instruments. A few hours ago, The Reserve Bank of New Zealand (RBNZ) announced their interest rate decision, which was a 50 pb rise to 3% in line with expectations, so there was no shock here. Apart from that, we got a comment from RBNZ Governor Adrian Orr stating that growth will be low but at the same time, they’re not forecasting a recession. The initial reaction of the NZD was bullish, but at the beginning of the European session we can see that it gave up almost all initial gains.

Another influential data is the UK CPI, which came in hot at 10.1% instead of the forecasted 9.8%. That is a new 40-year high in UK. The situation of the GBP is pretty similar to NZD, initially moving higher but easily gave up gains.

Still to come today we have retail sales from the US and the Federal Open Market Committee (FOMC) meeting minutes. Expect a ride for the USD and brace for higher volatility.

In general, the USD is strengthening after a paused yesterday. We can also see a bit of pullback on stocks, which is not a big surprise if we see how stretched the recent upswing was and consider all that fearmongering about a recession.