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  • richard evans

A very belated Happy New Year

Good morning

A very belated Happy New Year to you all. I’d given myself some time off over Christmas and then into January and now here we are, a month later, just wondering where the time has gone. I’m also wondering where on earth to start as we’ve had a pretty choppy time in the currency markets since Dec 2022.

Well lets go back to late 2022. I contracted one of these ‘seasonal illnesses’ over Christmas, a lot of coughing, fatigue, general aches and pains, that sort of thing. Not Covid, don’t think it was proper flu, but it was pretty bad and lasted well over two weeks. Sometimes you don’t realise just how bad you were until you’ve recovered, this was certainly the case for me. Seem to be over it now but I am still hearing of plenty of people coming down with nasty things so its clearly still doing the rounds.

We’ve had a pretty cold spell through January. Took the kids to school one day and saw -8.5c on the car, that’s pretty cold. We had a frost that seemed to last all January, but I was out and about in the garden over the weekend for the first time in ages and it seemed as though things were getting milder. I was wrong, a heavy frost again this morning tells me I was a little too early to be thinking of warmer weather.

As you’d expect there is plenty going on in the world, not all of it good but then of course it is only the bad stuff that gets reported. The Russian invasion of Ukraine is almost a year old, the West have supplied more advanced weaponry and the Russians appear to be pinned back but there seems little doubt they are gearing up for another offensive.

Relations between US and China haven’t improved. I’ve been watching with interest the news of this Chinese spy balloon that has been over the US for a while. It was finally shot down over the weekend and the US are scanning the Atlantic for debris. What on earth was that all about? A pretty blatant attempt at spying. I wonder what they gathered that they couldn’t get from satellites.

I’m still ploughing through Game of Thrones. Started back in October last year, now into the seventh season out of eight. I’d not got into it first time round but have to say I’m pretty well invested now. A little worried that we’re coming to the end and will need something to replace it with. I’m told Happy Valley is worth a watch, I know we had the season 3 finale over the weekend, so no spoilers please.

So, onto the markets. Well had I re-started writing this in early Jan rather than early Feb, I’d actually be writing about broadly similar levels in currencies. GBPUSD at 1.2060, USDJPY 131.85, Gold $1880, all not too far from those early-Jan levels. However in the meantime we’ve had a bout of US dollar weakness that has seen GBPUSD up to 1.2450, USDJPY down to 127.25 and gold all the way up to $1960. The USD weakness was very much down to slowing of interest rate rises and questions over the peak rate, however Fridays much stronger than expected nonfarm payrolls turned the USD dollar higher.

After a load of negative headlines, and despite this recent move GBPUSD is holding up reasonably well. However against other majors GBP is struggling, with GBPAUD down at 1.7400, GBPJPY at 159.00 and perhaps most telling GBPEUR just below 1.1200, some 250 points lower than it was a couple of weeks ago. Both ECB and BoE raised rates 50bps last week, with ECB rates now 2.5% and UK rates at 4%. FOMC also raised rates, their 25bps rise took US rates to 4.75%. I don’t expect to see 50bps rises from BoE or FOMC from now on, although we may still see ECB keep their pace of rate rises at the 50bps/meeting level for the next two or three meetings.

Not a great deal of in-depth currency analysis this morning but at least I’m back up and running. I was going to mention the differing fortunes of Spurts and Arsenal over the weekend, but then overnight we have seen reports of a huge earthquake in Turkey and Syria that has claimed many hundreds of lives and unfortunately the death toll will surely rise. Somehow the odd goal or two looks far less important.

- 10.00 EU retail sales

- 15.00 CAD Ivey PMI

- 17.00 BoEs Pill speaks

- 18.00 ECBs Lagarde speaks

- 23.30 Japan household spending

- 00.01 UK BRC sales

- 00.30 AUS trade balance

- 03.30 RBA rate annoucement

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