GBPUSD higher as i type....now 1.2470

Good morning

US dollar weakened through the day yesterday and that theme has continued into this morning, with GBPUSD at 1.2435 as I type, EURUSD testing that 1.0920/30 that has held a few times in the past couple of weeks. GBPEUR back up to high 1.13s, not quite breaking 1.1400 yet. Further upside for both EUR and GBP is possible, but depends greatly on overall risk sentiment. As we have seen recently, if sentiment turns sour, USD will push higher.

Plenty of thinking though that ECB have potential to increase rates further than the market currently prices in and as such there is ongoing interest in upside EURUSD trades. For now corporate interest seems happy to sell GBPUSD at these levels, or close to,.

RBA left rates unchanged this morning, AUD weakened on the release with GBPAUD trading from 1.8285 up to 1.8360 initially and then onto 1.8400 this morning. RBA statement did include the line ‘some tightening may well be needed’ which is slightly less hawkish than the previous ‘further tightening will be needed’.

RBNZ rate announcement tonight where a 25bps is expected but I do wonder whether the market will now consider ‘no change’ as a possibility. Its an outside chance, given the expectations for two 25bps rises, one tonight and one next month. AUDNZD now 1.0725, support noted at 1.0675. RBAs Lowe speaks tonight, soon after the RBNZ announcement. If we see decent NZD upside after the RBNZ, I wonder whether Lowe will try to sound a bit more hawkish to give AUD some support.

We are going to have some weird times in the US political arena. Trump seems to have increased his lead in the Republican presidential nominations for 2024, at the same time he faces charges in a New York court today. He is expected to plead not guilty. You’ll know I wasn’t completely against Trumps Presidency first time round, but I don’t think the world needs him in charge of the US for a second term. Enough is enough. I am still amazed though at the lack of decent candidates the US can offer out of the 330 million or so people living there.

Oil prices are stable after the rally yesterday that came as a result of the surprise announcement of OPEC+ production cuts. US have voiced their unhappiness at the cuts but they have little clout these days and their words will fall on deaf ears.

Don’t be fooled by the sunshine this morning, its freezing outside, we’ve had a thick frost. However it should warm up through the day, the rest of the week the weather looks pretty mixed. Make the most of the sunshine while you can.

- 15.00 US factory orders, JOLTS job openings

- 16.30 BoEs Pill speaks

- 17.30 Feds Cook speaks

- 23.00 AUS S&P services PMI

- 02.00 RBNZ rate announcement

- 02.30 RBAs Lowe speaks

Oil prices higher as OPEC+ surprise with production cut

Good morning

I hope you had a terrific weekend.

We awake this morning to a bit of a ‘risk-off’ feeling. Oil prices have leapt higher as OPEC+ announce production cuts of just over one million barrels per day, a move designed to support the stability of the oil market, they say. The US are not happy with the surprise move while futures prices suggest a mixed opening in the share markets.

Meanwhile USD has continued to move a little higher as it had done through late Friday trading. GBPUSD reached as low as 1.2275 this morning, now 1.2305, while EURUSD moved to 1.0790, now 1.0820. BoEs Haldanes comment that we could see a pause in UK rate rises did help GBP trade towards the lower end of what had been quite a tight range in GBPEUR overnight, now 1.1370

I don’t think ECBs de Guindos helped matters over the weekend, warning of risks that ECB are monitoring closely in the financial sector, adding that inflation likely to remain firmer for longer. ECBs Panetta said something we have been thinking for a while now, that firms are keeping prices higher than necessary to take advantage of higher profits, which in turn boosts inflation, in turn leading to higher rates.

RBA rate announcement in the early hours of tomorrow morning. There is a difference of opinion on this one, some see a 25bps rise most likely while others see RBA taking a pause, after raising 25bps back in the early March meeting. Back then they mentioned that although further tightening would be needed, inflation had peaked and growth had slowed. GBPAUD 1.8405 for the record.

I’ve noticed a little more talk recently over the possible BRICS currency. This has been talked about for a while now but I thought it had died down a bit but at the next BRICS summit in August it is likely to be high on the agenda. For years I’ve mentioned, on and off, the impact of currencies losing their reserve currency status. USD has been the reserve currency for so long now but the playing field is changing.

In football, Arsenal continue to lead the way with Man City following closely behind. Spurs play this evening, a crucial match if Spurs want to keep their hopes of a top-four finish alive. Three Premier leagues teams without a permanent manager now after Chelsea and Leicester removed Potter and Rodgers, Spurs having recently parted company with Conte.

All about PMIs today, although the larger geopolitical risks remain the key driver. It’s a bit chilly here but look like it’ll warm up and indeed we should have some decent sun over the next couple of days, a decent enough start for the kids holidays, just as long as you’re not trying to get out of Dover….

- 09.00 EU S&P manufacturing PMI

- 09.30 UK S&P manufacturing PMI

- 14.30 CAD S&P manufacturing PMI

- 14.45 US S&P manufacturing PMI

- 15.00 US manufacturing ISM

- 15.30 BoC business outlook survey

- 23.00 NZ business confidence

- 05.30 RBA rate announcement

Survived the first quarter.....

Good morning

Welcome to the end of the month and indeed the end of the first quarter of the year. That’s gone pretty quick. It really feels as though we have got away with what could otherwise have been a pretty horrific time. Global stocks are generally in positive territory and futures prices suggest we’ll have more upside when markets open.

The US dollar weakness continues, GBPUSD actually traded up to 1.2420 overnight, EURUSD to 1.0925, both are off those highs, now 1.2380 and 1.0895 respectively, but still at the upper end of recent ranges. In GBPUSD, the 1.2440 area has been tested a few times since mid-Dec and has held each time, we need to go back to June 2022 to see higher levels. An important area to watch. This mornings very slightly improved UK GDP has had little impact on the markets.

EU inflation out this morning, a strong reading could push EURUSD towards 1.10 but that area is likely to remain out of reach for now. As always around month-end we hear of the potential for erratic flows which could perhaps increase the chances of some volatility.

South Africa surprised the markets yesterday with a 50bps interest rate rise, against an expected 25bps, as they upped their inflation forecasts. This sent ZAR higher with GBPZAR trading sharply lower from around 22.35 to 22.00, currently 22.10. The vote was a close 3-2 in favour of 50bps, far from a unanimous decision.

Finland has gained NATO membership as Turkey votes in favour of admitting the country to the pact. This comes as reports Russia is looking to draft another 150,000 soldiers ahead of what must surely be another major push in Ukraine although some think they will be used simply to hold ground in East Ukraine rather than make further gains. Some reports put that number up around 400,000.

In other news, Trump is making the headlines as he becomes the first ex-US President to face criminal charges. They stem around his hush-money payment to Stormy Daniels. The payment of $130,000 was allegedly to cover up an affair back in 2006 and is not itself illegal. However Trump put the payment down to legal fees. Falsifying business accounts is a criminal offence in New York, and there is talk he is facing for than 30 charges for business fraud so one thinks there must be more to this than just a $130k payment.

I am not defending Trump, but this is surely pretty small-fry from people who I think would try to find anything to charge Trump with. Therre must be many other businessmen and politicians who have done the same and got away with it. Doesn’t make it right I know. Ms Daniels had signed an NDA which she then broke. I’m not sure what the law says about that.

Sticking with the US and some legal issues, Disney and Florida Governor De Santis have been having disagreements with De Santis determined to gain more control over the Disney theme park areas which have their own tax regime. De Santis appeared to be winning until it transpires Disney have used a legal clause which dates back to 1692 in an agreement which extends its terms until ’21 years after the death of the last survivor of the descendants of King Charles III’. That will obviously be some time. De Santis is not impressed and has vowed to seek a way round the clause, Disney say it is entirely legal. Conspiracy theorists would have a field day if anything happens to members of the Royal family from now on.

Have a splendid weekend. Looks like we’ll have to put up with this rain for another day or two but its possible Monday brings some sunshine with it. For those commuting, kids are now on school holidays so roads and trains should be quieter for the next couple of weeks.

- 10.00 EU HICP, unemployment

- 13.30 Core PCR, personal income/spending

- 13.30 CAD GDP

- 14.45 US Chicago PMI

- 15.00 US Michigan sentiment survey

- 20.05 Feds Williams speaks

- 22.45 Feds Cook speaks