Good morning
US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place recently.
In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.
This will be until Sunday 31st when we change our clocks in the UK.
All quiet in the world of currencies once again, GBPUSD and EURUSD just a few points lower than they were this time yesterday, now 1.2625 and 1.0825 respectively, with GBPEUR pretty much unchanged at 1.1660. ECBs Kazaks has reiterated his thinking that a rate cut in June would be appropriate and further cuts will be made cautiously to give time to see how the market reacts to lower rates.
Most interest came overnight in USDJPY which traded within a few pips of 152.00 on some dovish comments from BoJs Tamura, before some more verbal intervention from FinMin Suzuki sent the pair 40 pips or so lower. The highs in USDJPY surpassed those made in Oct 2022, at which time we witnessed a few bouts of actual currency intervention, hence perhaps the increased impact of Suzuki’s words this time. His wording was pretty similar to recent comments, ie ‘watching currency with a sense of urgency, won’t rule out any steps to deal with disorderly market moves’.
As I type, USDJPY is 151.70, I’m looking at the long weekend and wondering whether Japan would try to take advantage of some reduced liquidity and intervene at some point. A one week 151.50 USDJPY put costs around 60 yen pips giving a breakeven just below 151.00. It’s a bit rich for a cheap holiday play, moving the strike down 100 pips to 150.50 reduces the cost to around 30 yen pips. We know spending money on yen intervention rarely pays off, but then again nor does buying Euromillions tickets but we still get into those from time to time.
We will have the South Africa central bank reporting its latest interest rates this afternoon, consensus is for rates to remain unchanged at 8.25% although some recent higher inflation numbers do make a rate rise an outside possibility, but overall the feeling is rates will stay at 8.25% through to at least Q4 2024.
In other news, I see S&P have downgraded five regional banks over commercial real estate exposures, not a huge surprise but certainly a reminder that CRE issues are not going away. PBoC have fixed USDCNY at 7.0946, once again far below the actual trading level of USDCNY. Hopes of a ceasefire in Gaza have diminished as it is reported the Israeli negotiation team have left talks after Hamas made demands they deemed unreasonable, I presume Hamas want Israel to leave Gaza before any hostages are released. Fridays jackpot is around £44m by the way.
Conspiracy theorists have ‘enjoyed’ a couple of major events recently. I apologise, I am aware the word ‘enjoyed’ is not really the right terminology for events such as the Russian terror attack or the US bridge collapse where many people have lost their lives. But both events have seen the rumour-mongers in full flow. For Russia, it is about who was really behind the attacks, with Russia pointing fingers at Ukraine and the West, while others suggest Russia’s own FSB had some involvement.
For the Baltimore bridge, it is all about whether it was simply a loss of power, a deliberate crash or whether the boat was hacked into by external sources. All will be revealed in time perhaps, or maybe we’ll never know the truth. I would however expect to see bridges such as this now have greater protection built around them, I’ve often thought how delicate some of the supporting structures look. A huge amount of work and of course a huge amount of disruption now to the Port of Baltimore, one of the top ports in the US in terms if volume and cargo value.
In football, Wales failed in their Euro 2024 qualifying attempt, losing to Poland on penalties after the scores remained goalless after extra time. England scraped a draw in their friendly with Belgium, an injury time goal prevented a second loss in a row for England. Spain drew with Brazil, I didn’t see them match but suspect it was something of a thriller, with Brazil scoring a goal late in injury time to secure the draw. We’re back to Premier League action this weekend.
Its another sunny start to the day here but looks like we’re in for more rain, perhaps not quite as heavy as it was yesterday. Looking at the BBC forecast, it’s showing rain every day from now until into the second week of April, with temperatures failing to get above 15°c until then at least. Let’s hope they’ve got it wrong.
Not much to get our teeth into today, early tomorrow morning we will have the latest UK Q4 GDP numbers, expected to see no revision to the previously announced estimates, thereby confirming we were in recession at the tail end of last year.
Have a great day
- 09.00 ECBs Cipollone speaks
- 10.00 EU consumer confidence
- 10.30 UK BoE minutes
- 13.00 SARB rate announcement
- 13.30 ECBs Elderson speaks
- 22.00 Feds Waller speaks
- 23.50 BoJ summary of opinions
- 00.00 AUS consumer inflation expectations
- 00.30 AUS retail sales
- 07.00 UK GDP