US downgraded to negative

Market reports
Thanim Islam
  • Moody downgrade US outlook.
  • All eyes on inflation numbers

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Markets were pretty flat over the course of Friday with the only notable data being the University of Michigan's inflation expectations coming in higher than expected giving support to US treasury yields. Late in the evening, we saw a rally in stock markets but there was negligible movement in risk-correlated currencies. Also on Friday evening, credit rate agency, Moody lowered their outlook on the US from stable to negative on account of wider budget deficits and political polarisation.


Market rates

* Daily move - against G10 rates at 7:30am, 13.11.23

** Indicative rates - interbank rates at 7:30am, 13.11.23


  • EUR: ECB Guindos
  • GBP: BoE Mann and Breeden

Our thoughts

USD has started the week marginally lower as markets mull over Moody's negative outlook on the US. Very quiet today but the rest of the week is set to be very busy. Tomorrow we have UK job and wage numbers, EU GDP numbers and US inflation numbers. Wednesday see’s UK inflation numbers as well as US retail sales and then Friday we have UK retail sales numbers alongside EU inflation numbers. There is also a risk of a US government shutdown later this week as well as President Biden’s meeting with Xi Xinping later this week and what this means geopolitically.

Chart of the day

All about inflation numbers this week with prints due from US, UK and EU. UK core inflation is expected to ease from 6.1% to 5.8% with the US and EU core numbers expected to remain the same as September. The US numbers will be key in determining whether the market is right in pricing US interest rate cuts for next year or whether the Fed is right in insisting rates will stay higher for longer. The direction of USD will take cues from this print.

Source: Bloomberg Finance L.P.

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