© Reuters. FILE PHOTO: Japanese yen banknotes are seen in this illustration photo taken September 23, 2022. REUTERS / Florence Lo / Illustration
By Joice Alves
LONDON (Reuters) – Sterling jumped on Thursday on a media report that the UK government was discussing changes to fiscal plans announced last month, while investors awaited support. the Bank of England’s upcoming support for the bond market.
The yen weakened near 24-year lows, while markets were also ahead of US inflation data due later in the day, which could offer clues as to where the Federal Reserve will go. how much to raise interest rates.
The pound rose 1.5% to a one-week high against the dollar at $1.1267 by 1205 GMT after Sky News reported the UK government is reviewing what parts of the package Their tax cuts could be ignored by Chancellor Liz Truss in once again .
The government said on Wednesday that it would not reverse plans for widespread tax cuts or reductions in public spending, which have rocked the country’s financial markets as it remains unclear which moves will be funded. how.
Stuart Cole, macroeconomics expert at Equiti Capital, said: “Markets in the UK are back in focus – but still unconfirmed – reports that the government is looking to reverse or shrink. substantially its unrefundable tax cut.
On Wednesday, sterling fell to a near two-week low but rebounded after the Financial Times reported that the BoE had privately signaled to lenders that it was ready to expand its bond-buying program. its emergency ballots beyond the Friday deadline if market conditions require it.
However, the central bank later officially reiterated that its temporary gold buying program will end on October 14.
UK pension schemes are racing to raise hundreds of billions of pounds to bolster derivatives positions before the BoE’s Friday deadline.
Also supporting the pound, the UK’s longer-term gold-plated yield fell on Thursday, falling back from a 20-year high that hit Wednesday before the BoE bought £4.4 billion (4.9 billion euros). billion dollars) in debt in daily reverse auctions – which will end on Friday.
“We can expect market dominance to continue to grow as market participants prepare for the BoE to exit the market… We can expect the market to focus on risk-driven volatility. prolonged gold market and potential contagion risk,” said Jeremy Stretch, head of G10 FX Strategy at CIBC Capital Markets.
The volatility of the pound https://fingfx.thomsonreuters.com/gfx/mkt/zgvomqdzjvd/Sterling%20volability.png
Elsewhere, the yen has struggled against the dollar, trading at 146.7, well away from the August 1998 low of 146.98 per dollar hit on Wednesday and past its low. last month was 145.90 per dollar, prompting the Japanese authorities to intervene to buy the yen.
Rodrigo Catril, senior currency strategist at National Australia Bank (OTC:) said the yen “has lost its safe-haven appeal”.
“There was a sense of caution around the previous high (for dollar/yen)… now they’ve crossed it, and so it looks like you have a little more room to move on, because there hasn’t been any intervention.”
CONCENTRATION INFLATION CODE
Feeling the pressure of a stronger pound, the greenback, which measures the greenback against a basket of other currencies, fell 0.4% to 112.77, but not too far from a 20-year high touched two weeks ago.
Investors are focusing on US core inflation data to be paid later, forecast at 6.5% year-on-year in September. Data showed Wednesday that US producer prices rose more than expected last month.
Minutes of the Federal Reserve’s policy meeting last month showed officials agreed they needed to raise interest rates to a more limited level – and then hold there for a while – to meet the target. reduce “unacceptably high and widespread” inflation.
The euro rose 0.43% to $0.9743.