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  • richard evans

178 shopping days until Christmas...

Good morning

Its Friday and it’s the end of the first half of the year. All come around very quickly indeed. There are only 178 shopping days until Christmas. But let’s not get ahead of ourselves, plenty to do between now and then.

GBP seems to have stabilised in the low to mid-1.26s but EURUSD has traded lower, now 1.0865, which leaves GBPEUR at 1.1635. Other GBP crosses are broadly unchanged, GBPAUD is 1.9090, GBPJPY 183.10. USDJPY is up at 144.80, but did reach as high as 145.05 overnight after the weaker than expected CPI data, prompting the usual comments from Japan officials, this time is was FinMin Suzuki who reminded the markets they are watching FX closely. If anything his tone was slightly firmer than previously which, for now, has tempered yen weakness. Japan may well be unhappy with the level of USDJPY but with other central bank rates remaining high, possibly moving higher, and BoJ firmly sticking to their loose monetary policy, it isn’t really a surprise the yen is weakening.

Gold has lost ground, currently $1906 but did get as low as $1893 yesterday afternoon. Somehow Bitcoin is holding its ground above $30,000, I still don’t really get the interest here but I never claim to understand everything, each to their own and all that.

Stocks had a decent month, even the FTSE managed a gain of nearly 0.7%, which may be reasonable but nothing compared with the 5%+ gain in the US S&P 500. Most Asian markets were lower overnight but also showed decent monthly gains, the shining light being the Nikkei in Japan which was up some 7.5%. USDCNY meanwhile fixed up at 7.2258, another high in this cycle, but has traded higher, touching the 7.2600 area.

Feds Bostic has suggested US rates are Ok where they are and doesn’t see the need for further rises unless the economy and inflation didn’t cool further as he expects it to. He’s not looking at rate cuts this year or next but doesn’t see a need right now for higher rates. Jul 26th is the next FOMC meeting, will be interesting to hear what other Fed officials say in the run up to this meeting.

It has been nearly four months since EURCHF last traded above parity, now 0.9770 having seen a low around 0.9670. UBS strategy team have suggested the pair could move back up to parity, basing their idea on widening ECB/SNB rate differential and SNB continuing to intervene to weaken CHF. It is a medium term view so don’t

expect anything overnight but worth keeping an eye on.

EU inflation numbers are out this morning, headline expected to show a drop but core expected to show a small gain. This would probably support another ECB rate rise next month but put a question over the need for further rises thereafter. US data includes the Feds favourite Core PCE deflator, plus Chicago PMI and Michigan sentiment survey. These do have the potential to move markets but I’m rather hoping we’ll finish the month without too much fuss and bother.

In other news, rioting has taken place across France following the death of a teenager who failed to stop when asked by police, and was shot at close range by the police officer. Certainly far too strong reaction from the police but they do have my sympathy when dealing with people who don’t follow police instruction. Protests after the death were reasonable but as is usually the case the protests turn into an excuse to burn cars and property, with looting also reported on a fairly wide scale level. There may be no excuse for the police shooting but there is also no excuse for the violence, damage and theft.

If you’re using the BBC website for weather forecasts, don’t be alarmed if you see temperatures down to 8 degrees next week, it’s a glitch that they don’t seem to be able fix. Should be nice enough over the weekend for bbq’s, and despite some recent rainfall I’m not sure the grass will need cutting, its very brown at the moment and isn’t growing much.

Undeterred by the recent events surrounding the Titanic, the rich and beautiful climbed aboard Bransons Virgin Galactic plane, the first flight of the commercial rocket plane which takes passengers to the edge of space. They reach up to 85km above the earth and passengers experience zero gravity. I’m mildly jealous and I’d certainly choose that trip over a submarine ride o the bottom of the ocean.

Have a splendid weekend, got some cricket to watch with England taking on the Aussies in the second test, but there isn’t much going on in the world of football other than watching the gossip from the transfer markets, most of which is nonsense anyway. We do have the F1 from Austria which includes a sprint race on Saturday. I see Hamilton has spoken about how he’d like to see the dominance of one team removed from F1, which is a bit rich given he enjoyed success for six years or so with Mercedes and didn’t seem too unhappy about it then, but isn’t so happy now Red Bull are the dominant team. It would be nice to have closer racing but I don’t think its down to the rule-makers to penalise success. Finally, we are one prom down, all went pretty well and I didn’t get involved in any after-party nonsense. My daughter has her prom this evening, we do have some coming round for pre-prom stuff but once again I have made it clear I have no interest in a load of drunken teenagers turning up at midnight at my house.

- 09.00 German unemployment

- 10.00 EU HICP, CPI

- 13.30 US personal income/spending, Core PCE

- 13.30 CAD GDP

- 14.45 US Chicago PMI

- 15.00 US Michigan sentiment survey

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