The refurbished Hong Kong Stock Exchange in Hong Kong, China, on June 24 2022. Picture: BLOOMBERG/BERTHA WANG
“We expect a reminder that more tightening is needed and there is still a lot of progress to be done on inflation, but no explicit commitment to a specific rate hike action for September,” said Jan Nevruzi, an analyst at NatWest Markets.Futures are fully priced for another hike in September with the only question being whether it will be one of 50 or 75 basis points, while rates are seen up, at 3.5% to 3.75% by year end.
Unease over China's economy tipped the yuan to a 23-month low, while pressuring stocks across the region. BofA's latest survey of investors found most were still bearish, though 88% did expect lower inflation over time, the highest proportion since the financial crisis. Equity valuations were not helped by a steep rise in global bond yields last week. British 10-year yields climbed by the most in five years following a shock inflation report, while bund yields jumped on a sky-high rise in German producer prices.
“The USD can track above 110.00 this week if the August flash PMIs for the major economies show a further slowing in economic growth or contraction in activity,” said Joseph Capurso, head of international economics at CBA, referring to surveys of manufacturing due on Tuesday.
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