Alarms to sound on Sunday

Good morning

UK retail sales came in lower than expected this morning, blamed partly on poor weather. GBP lost a little ground across the board and as I type those losses have extended. Nothing massive, GBPUSD is back to 1.2400, GBPEUR 1.1330, but we’ve certainly seen a dent in hopes of those looking for a stronger GBP. The US dollar has benefitted and the likes of EURUSD has been dragged lower from 1.0960 to 1.0940, again not a massive move but does take it just that bit further away from the key 1.1000 area.

BoEs Tenreyro has said the BoE may already have tightened too much. She is usually pretty dovish so the comments aren’t too much of a surprise although it does show the difference of opinions between members, some of whom look for more tightening and Tenreyro who would possibly back a rate cut.

Japan CPI came out higher than expected overnight which did push JPY a touch higher initially and then a bit of waning risk sentiment pushed yen higher still early this morning with UDSJPY down to 133.740 and GBPJPY just back below 166.00 for the first time since Monday morning. B The higher inflation could possibly lead to a tweak in monetary policy, something the market is pretty nervous about. Not worth chasing the likes of USDJPY lower but mean UDSJPY will struggle to push to recent highs.

As we talk of 25bps rate rises and rates between 3-5%, spare a thought for Argentina where their central bank has just raised rates by 3% to 81% after a huge 104% annual inflation announcement. That isn’t great.

On the subject of ‘not great’, SpaceX did launch their Starship, the most powerful space rocket ever developed. All seemed to be going well until it experienced what Musk calls a ‘Rapid Unscheduled Disassembly’. In other words, it blew up. It turns out the separation that should occur around three minutes into the flight didn’t happen. Musk doesn’t seem too concerned, seeing it as just a small step in a long journey.

So, to the weekend. The weather which has been pretty good over the past few days looks like it will leave us with lower temperatures and rain coming along instead, so perhaps not much to look forward to. Do be prepared Sunday mind you, at 3pm our mobile phones should sound an alarm, a test of the system the government will use to contact the nation in the event of an emergency. I hope they’re not expecting to have to use it.

- 09.00 EU S&P manufacturing, services PMI

- 09.30 UK S&P manufacturing, services PMI

- 13.30 CAD retail sales

- 14.45 US S&P manufacturing, services PMI

- 15.30 ECBs Elderson speaks

- 18.45 ECBs de Guindos speaks

GBP up after UK inflation numbers

Good morning

Slight email issue this morning, I wondered why I’d not had many emails and now see loads on my phone that aren’t showing on my PC. Don’t know what that’s all about, I’ve even rebooted and its not worked. As we know, if turning it off and on doesn’t work, nothing will. Anyway its going to be a bit brief this morning I’m sorry to say.

GBP has had a push higher after the UK inflation numbers out this morning failed to show the declines that were hoped for. Headline YoY had been expected around 9.8% but came in at 10.1%, while headline MoM was 0.8% against an expected 0.5%. GBPUSD traded from 1.2415 to 1.2470, GBPEUR pushed up from 1.1325 to 1.1370 or so. GBP has also made gains against other currencies, GBPAUD for example up from 1.8455 to 1.8550 and GBPJPY up from 166.90 to 167.90. BoE’s job is not getting any easier.

Otherwise I’m struggling to see anything particularly of interest in the currency markets which is fortunate given the email issues. Not a particularly busy calendar today which should give me time to look into my email problem, although I am out later at a funeral unfortunately. A parent of an old school friend passed away recently. I fear I have reached that age where this will become more regular.

Have a great day, if you do send an email but don’t get a reply quickly I apologise in advance. Anything urgent feel free to call….

- 10.00 EU HICP

- 11.35 ECBs Lane speaks

- 16.00 ECBs Schnabel speaks

- 19.00 Feds Beige boob

- 23.45 NZ CPI

- 00.50 Japan trade

- 02.15 PBoC rate announcement

- 02.30 AUS AUS NAB business confidence

Apple offers savers 4.15% interest

Good morning

As expected it was a reasonably quiet day in the currency markets yesterday, GBPUSD now pretty much unchanged from this time yesterday morning at 1.2415 having dipped to 1.2355 through the afternoon, EURUSD slipped back to 1.0910 but has now recovered to the mid-1.09s. This leaves GBPEUR a touch higher at 1.1340, despite some mixed UK unemployment numbers this morning.

Yen has stayed weak as Ueda continues with the easy monetary policy theme and until we see any change of stance Yen should remain weak. USDJPY up at 134.40 and GBPJPY making 2023 highs, trading within a few pips of 167.00. Elsewhere, gold has had a shift back below $2000, reaching around $1980 before making a slight recovery back to $2000. AUD pushed a little higher as RBA minutes showed a more hawkish meeting than expected, with a 25bps rise being discussed before eventually kept on hold, but with a clear message that further tightening could well be required. GBPAUD had traded down to 1.8400 although has since worked its way back to 1.8470.

China are talking about conducting another major maritime military drill, wanting to show their might as they aim to control waters around China and of course close to Taiwan. Meanwhile Taiwan are to buy 400 anti-ship missiles from the US which would be used to repel any China invasion.

ECBs Lagarde has said the status of currencies such as USD and EUR should not be taken for granted. This issue of reserve currency status, particularly the US dollar, is something that I have mentioned a few times over the years and only last week had a brief conversation with a far more educated man than I about the potential for the USD to lose its reserve status and how that could weaken the US dollar. We agreed it was something that could happen over time but the fact Lagarde is talking about it suggests perhaps its closer than we think even though it isn’t exactly imminent. With the likes of China, India and crypto all trying to get in on the act, it does seem a change in the world order as we know it is around the corner.

Apple have launched a savings account in the US offering a rate of 4.15%. Goldman Sachs have a hand in the service which has the potential to start something of a race to get cash deposits out of lesser-paying accounts. I’d mentioned Charles Schwab a while back, a firm losing money as equity investors moved their money to cash, this announcement from Apple will only make their life worse.

I had been looking forward to watching SpaceX’s latest launch but this has been delayed due to a small technical issue. The launch would have been the tallest and most powerful ever, some 120m tall with 33 raptor engines producing some 17.1 million lb of thrust. Hopefully it won’t be too long before the next launch attempt.

UK inflation numbers out early tomorrow morning are hoped to show a YoY decline to just below 10%, in the meantime we have some US housing data and central bank speakers to keep out attention. Have a great day.

- 10.00 German ZEW

- 13.30 US building permits, housing starts

- 13.30 CAD CPI

- 14.00 ECBs Elderson speaks

- 16.30 BoCs Macklem speaks

- 18.00 Feds Bowman speaks

- 05.30 Japan industrial production

- 07.00 UK CPI, RPI, PPI