What impact will Trumps 'Liberation Day' have?

Good morning

Here we are, Trumps ’Liberation Day’.  His actual announcement isn’t until this evening, 9pm UK time to be more precise, so there is a chance we’ll see a continuation of the tight ranges we’ve witnessed recently in the majors throughout the day, until we get to the main event.

At one stage yesterday it did look as though those ranges might break, GBPUSD traded down to the 1.2880 area, I was watching the 1.2865/70 area which has really been the low since early March, but weaker than expected JOLTS jobs number and ISM manufacturing PMIs sent USD lower once again, and it wasn’t too long before we back at 1.2920, an area that has been something of a pivot point for the past couple of weeks.  EURUSD also dipped, reaching 1.0780 briefly before regaining 1.0800.  GBPEUR had been as low as 1.1935 but ended the London session at 1.1965.

Interesting moves overnight as both AUD and NZD pushed sharply higher.  GBPAUD is now at 2.0490, GBPNZD at 2.2510, down from peaks around 2.07 and 2.28 respectively.  I’ve not seen a sensible reason for the shift other than some hope that they will be spared in Trumps tariff overhaul.  Stronger than expected Aussie building permits overnight surely can’t be responsible. 

Russia have said they won’t back a peace plan while Zelensky is in power.  I presume instead they want to put in their own pro-Moscow guy who would welcome Russia with open arms.  Regardless, US are warning of sanctions on third party countries who purchase Russian oil and gas if it seems that Russia are stalling the peace process. Meanwhile US are reported to be sending more ships and planes to the Middle East as they continue to hit Houthi forces in Yemen.

In football, Arsenal beat Fulham to bring them within nine points of Liverpool at the top of the table.  Forest beat Man Utd to help their top-four chances, now eight points clear of fourth placed Chelsea, while Wolves beat West Ham.   Those latter two results certainly helped Spurs as neither Man Utd or West Ham gained any league positions.  Plenty of action this evening including the Merseyside derby.  Brighton v Villa could be an interesting match, with both teams still very much in the running for a European place.

US ADP employment numbers out this afternoon, and we’ll hear from a couple of ECB speakers through the day.  Trump speaks at 9pm, so much uncertainty here, I will be looking at some short dated options to provide cover for some worst case outcomes.  They’ll be pretty tailored to individual client position so best let me know if you’re interested.

Have a great day…

-  11.30 ECBs Schnabel speaks

-  13.15 US ADP employment

-  15.00 US factory orders

-  15.05 ECBs Lane speaks

-  21.00 Trump’s ‘Liberation Day’ tariff announcement

-  21.30 Feds Kugler speaks

-  01.30 AUS financial stability review

-  02.30 AUS trade balance

-  02.45 China caixin services PMI

It may be 1st April, but its not very funny

Good morning

Q1 is over and we’re into Q2, whatever that may bring.  We have Trump’s Liberation Day tomorrow where we are expecting to see some tariff announcements and who knows what else at around 8pm UK time, but given the uncertainty it is little surprise that we’ve seen muted action in the currency markets and weakness in the equity markets. 

USD did push a bit higher yesterday helped by a stronger than expected Chicago PMI, with GBPUSD trading as low as 1.2885 briefly, EURUSD hit 1.0785.  Both recovered pretty quickly to 1.2910 and 1.0815, which put GBPEUR around its lows of the day at 1.1940.  Relative GBP weakness came as No 10 said they are expecting to be hit by US tariffs.  There had been a hope that we’d get away with it, with so much focus on Canada, EU and China.  US have also expressed concern over the lack of free speech in the UK, quite a strong and unusual step.

RBA kept rates on hold yesterday but sounded cautious as to the economic outlook and made it clear they still regard current policy as restrictive and still sees getting inflation back to target as its key priority, with no rate cut discussed at this meeting and no clear path to a cut at their next meeting in May.  GBPAUD is currently 2.0665, down from its highs yesterday around 2.0730.

Marine Le Pen did indeed get sentenced to prison (electronic tag rather than in custody) and barred from public service, ruling her out of running in the French 2027 presidential election, save for an appeal which she is sure to do.  I really don’t know whether this is perfectly normal, or a way of preventing democracy by taking out the key opposition, certainly if it had happened anywhere outside main Europe we’d be talking of foul play.  Other right-wing EU leaders, Italy’s Salvini and Dutch Wilders have expressed outrage, and even Putin has slammed the decision saying it is a violation of democratic norms.

Meanwhile reports suggest Putin is sending thousands of additional troops to Ukraine, there is growing feeling that Russia will try to make new inroads into Ukraine territory before and land carve up is agreed.  And if war in Ukraine isn’t enough, China are conducting large military drills around Taiwan.  As you know, I do believe that one of these days a military drill will turn into a full scale invasion, and there will be little anyone can do about it. 

While talking of China, I have read that US tariff talk could just push China closer to its neighbours.  China are reported to have suggested they will unite with Japan and South Korea in response to US tariffs.  The US really is at risk of alienating its allies and forcing them into partnerships and deals with other trading blocs around the world, some of whom don’t quite share the values and morals the ‘western world’ seem to have in common

I see the guidelines for judges which could lead to two-tier justice is to be reversed.  The plan suggested punishments should take into account details such as faith and  ethnic minority.  I presume it was one of those set out with good intention, perhaps to help survivors of abuse, but has been ill-thought through.  Or perhaps it was indeed to punish some people harder than others.  

Premier league action this evening sees second place Arsenal take on Fulham, and third place Forest taking on Man Utd.  West Ham are playing against Wolves, a draw or win for West Ham would take them above Spurs.  Could really do with West Ham and Man Utd losing, although a win for Wolves would put them within five points of Spurs down at the bottom.  Not a great place to be.

So, with the sun shining, Putin lecturing Europe on democracy, Trump wanting to buy Greenland, China and Japan getting closer, free speech at risk in UK and Spurs near the bottom of the Premier League, it would be reasonable to assume it’s all just some sort of joke.  But no, it may be April Fool’s Day, but this is all really happening.  Oh joy! 

Have a great day…

-  08.55 German manufacturing PMI

-  09.15 BoEs Greene speaks

-  09.20 ECBs Cipollone speaks

-  10.00 EU HICP

-  13.30 ECBs Lagarde speaks

-  14.30 CAD S&P manufacturing PMI

-  15.00 US ISM manufacturing PMI

-  17.30 ECBs Lane speaks

-  22.45 NZ building permits

-  01.30 AUS building permits

End of a volatile Q1 but no sign of volatility abating as we await Trump's tariff announcements

Good morning

Option expiries back to 3pm London time, key US data releases back to 1.30pm/3.00pm london time after UK clock change this weekend.

Well what a splendid weekend, and what a difference a bit of warm sunny weather makes.  OK, there was still a chilly breeze which made it one of those odd times where you’d walk down the street and some people would still be wrapped up in coats while others had braved the shorts and t-shirts.   The forecast for the whole week shows sunshine, with temperatures pushing towards 20°c but not quite getting there.  Still cold overnight mind you. 

Anyone looking for a cheap treat in London would do well to head to 22 or 8 Bishopsgate.  Both are pretty new, and very tall buildings and both have viewing platforms up on the 58th (22nd Bishopsgate – Horizon 22) and 50th (8 Bishopsgate – Lookout) floors.  Access to is free although it is sensible to book in advance.  You do need to book well in advance for Horizon but Lookout is much easier, OK it is 8 floors lower but the view is still hugely spectacular, particularly on clear days such as those this weekend.   There aren’t many things you can do that are free.  By contrast, The Shard’s viewing platform is taller, around the 70th floor and has a full 360° vista, but costs £38 for an adult. 

Friday’s trading day came and went with little real fuss.  GBPUSD traded broadly within a 1.2920 and 1.2965 range, as I type it is at the upper end of that range.  EURUSD had seen a low of 1.0765 Friday, but had a strong push higher to 1.0845, although was unable to break above that level despite trying a few times overnight and this morning, now back at 1.0835.  The USD weakness comes as markets talk of lower US growth and more rate cuts from the Fed to counter the tariff-led weakness in the US economy.  The relative strength of EUR over GBP is noticeable in GBPEUR, the pair had been as high as 1.2025 last week but a sell-off through Friday saw it trade as low as 1.1945.  We’ve recovered a little to 1.1970 this morning. 

Equity prices were generally lower Friday as the markets await Trumps ‘Liberation Day’ on Wednesday.  Overnight most Asian markets were lower, Japan hit hardest with Nikkei down over 4%.  Talk that Trump is still looking for larger and wider-ranging tariffs than the recent reports suggest, while other nations are preparing their response should they be hit hard on 2nd April.  With all the uncertainty it is little surprise that gold has hit record highs yet again, this time up at $3.128.

We’ve seen the imprisonment of Erodgan’s opponent Imamoglu and we look on it as a loss of democracy, with protests taking place across Turkey.  Meanwhile in France, I see Marine Le Pen could be barred for standing in the next presidential election if she is sentenced for using EU money to pay party salaries.  Now I don’t know all the ins and outs here but it seems judges will have the power to prevent her from standing in the election in which she is one of the potential winners.  Many don’t like her right-wing policies but this smells a little bit of getting rid of political opponents, just as we have seen in Turkey.

In other news, Trump has said he is very unhappy with Putin who doesn’t seem to be doing what Trump says with regards to peace in Ukraine.  Really, what did he expect?  Did he also expect Greenland to welcome US with open arms?  Or expect countries to accept tariffs with no retaliation?  Well, I actually think yes, he did expect that. He’s in for a nasty surprise, but I’m not comfortable with how irrationally he will respond.

Congratulations to Crystal Palace, Notts Forest, Aston Villa and Man City for making it to the FA cup semi-finals which take place on 26th April.  No great surprise that Man City are favourites but they have to get through high-flying Forest first.  Premier league action returns this week, can’t say I’m looking forward to Chelsea v Spurs n Thursday.  That rarely goes well for Spurs!

Looking to the week ahead, RBA are expected to leave rates unchanged at their meeting early tomorrow morning.  EU inflation tomorrow, US ISM PMI’s tomorrow and Thursday, while the week also brings US employment data including JOLTS Tuesday, ADP Wednesday, Challenger and initial claims Thursday and the finale, the nonfarm payrolls Friday.

So with the first quarter pretty much out of the way and a week of sunshine ahead you’d think things can’t get a lot better. Well, most domestic bills are going up, including gas and electricity, water, and even council tax, despite the many clips of Starmer doing the rounds where he assured us all that he would freeze council tax levels.  We are paying more and getting less, that’s for sure and I for one am not happy, particularly when I read of the huge dividends being paid to energy and water firms.

And on that note I will end today’s rant, and wish you all a very tremendous day. 

-  13.00 German HICP

-  14.45 US Chicago PMI

-  00.30 Japan unemployment

-  00.50 Japan Tankan survey

-  01.30 AUS retail sales

-  02.45 China caixin manufacturing PMI

-  04.3.0 RBA rate announcement

-  05.30 RBA press conference